Financial services bonus cap (Sec. 25a KWG): More work to be done?

As of January 1, 2014, the variable compensation of employees and managers of financial institutions in Germany generally cannot exceed 100 % of base salary according to the new Section 25a of the German Banking Act (Kreditwesengesetz/ KWG). The German Federal Financial Supervisory Authority (BaFin) reviewed bonus practices at 14 financial institutions in 2013 (before the new rules were in force) but no specific banks were mentioned. Based on the review it seems like some German financial institutions may need to adapt their current remuneration systems in order to comply with the new rules – more work to be done!