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ECB to Empower Risk Managers

ECB to Empower Risk Managers

by Starling Insights

Starling Insights Editorial Board

Dec 13, 2023


In recent comments to the Financial Times, Elizabeth McCaul, a Member of the Supervisory Board at the European Central Bank (ECB), advocated for empowering risk managers to control banker bonuses to improve compliance with risk appetite frameworks. "I think we could do more to strengthen the hand of risk managers," she said. 

McCaul's statement contrasts with calls from industry leaders for Europe to follow the UK in relaxing post-financial crisis bonus restrictions. The EU's rules that limit bonuses to twice base pay were introduced in 2014 to deter excessive short-term risk-taking among top executives. After the UK was freed from ECB requirements following Brexit, the government removed the bonus cap for UK banks prompting concerns about an uneven playing field for banks based in the EU. However, according to McCaul, the ECB is "very happy" with how the rules were operating in Europe. 

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