5.5 Role of subsidiaries and branches

Investment firms that are subsidiaries of a Union parent undertaking should implement within their remuneration policy the policy issued by the consolidating Union parent undertaking and the process for the identification of staff.

All subsidiaries should actively participate in the identification process carried out by the consolidating Union parent undertaking. In particular, each subsidiary in the scope of prudential consolidation, including those not themselves subject to Directive (EU) 2019/2034, should provide the Union parent undertaking with all information necessary to properly identify all staff who have a material impact on the risk profile of the investment firm or the assets it manages on a consolidated basis.

Subsidiaries that are not themselves subject to Directive (EU) 2019/2034 are not required to perform an identification process on the solo level, unless they are required to do so under sector-specific remuneration requirements. For those subsidiaries that are not subject to the Directive or other specific remuneration requirements, the assessment should be performed by the Union parent undertaking on the consolidated basis, based on information provided by the subsidiary. Investment firms falling within the scope of Directive (EU) 2019/2034 should conduct their own self-assessment for the identification of staff on the solo level. Investment firms which are included in an identification process on a consolidated basis may delegate the practical application of the identification process on a solo level to the Union parent undertaking.

Branches in a Member State of investment firms having their head office in a third country and investment firms in a Member State which are subsidiaries of parent investment firms in third countries should conduct the identification process and inform their parent investment firm of its results. Investment firms in a Member State should also include their subsidiaries that fall in the scope of prudential consolidation and branches located in third countries in their assessment. Investment firms should be aware that branches form a non-independent part of the investment firm.

For third country branches located in a Member State, the criteria for the identification should be applied in the same way to the functions, business activities and staff located in a Member State as they would be for an investment firm on an individual level.