5.1 Prior approval of exclusions

Where the investment firm determines in accordance with the RTS on identified staff that the professional activities of the staff member do not have a material impact on the investment firm or the assets it manages and applies for a prior approval, the following should apply:

• a. the management body should decide based on the performed analysis within the annual identification process if staff have in fact no material impact on the risk profile of the investment firm or the assets it manages and inform the supervisory function of the decision taken. The supervisory function or the remuneration committee when it is established should review the criteria and process under which the decisions are taken and approve the exemptions made;¹⁹
• b. any application for prior approval should be made without delay, but at the latest within six months after the end of the preceding financial year. The competent authority should assess the application and approve or reject the application, to the extent possible, within a three-month period after receiving the complete documentation;
• c. where the staff member was awarded total remuneration of EUR 1,000,000 or more in the preceding financial year, the competent authority should immediately inform the European Banking Authority about the application received and provide its initial assessment. On request, the competent authority should immediately submit all information received by the investment firm to the EBA. The EBA will liaise with the competent authority to ensure that such exclusions are granted in a consistent way before the decision regarding the approval or rejection of the application is taken by the competent authority.

¹⁹ Please refer to paragraph 103 with regard to the approval of exemptions to the remuneration policy.

The prior approval regarding exclusions of staff identified in relation to the quantitative criteria should be granted only for a limited time period. The request for prior approval under the RTS on identified staff should be made each year. With respect to staff for whom a decision on the application is taken for the first time, the prior approval should only concern the financial year in which the prior approval was requested and the following financial year. For staff for whom the exclusion has already been approved for the ongoing financial year, the prior approval should only concern the following financial year.

Where identified staff would be excluded in subsidiaries which are not themselves subject to Directive (EU) 2019/2034, the competent authority is the competent authority of the parent investment firm. For branches of investment firms where the head office is located in a third country, the competent authority is the competent authority responsible for the supervision of investment firms in the Member State where the branch is located.

Requests for prior approval should include all names or another unique identifier for identified staff for whom an exclusion should apply, the percentage of the business unit’s contribution to the investment firm’s total own funds requirement in which the staff member is active and the analysis of the impact of staff on the investment firm’s risk profile for each identified staff member. Where identified staff are active in the same business unit and have the same function, a joint assessment should be made.