66 / 94
P.
66
2018 Pillar 3 Disclosures
Information on remuneration
These are the strategies employed to comply with the aforementioned objectives:
•
Risk adjustments prior to accrual
Groups identified as 1 and 3
The accrual of variable remuneration for this group is determined by compliance with the
tolerance levels defined by the main indicators determining the risk profile of the bank;
specifically, maintaining the market risk limits and solvency targets defined by the Board of
Directors. Profitability thresholds are also fixed for the capital involved in activities undertaken.
Group 2
Remuneration for this group is determined by compliance with risk levels allocated to activities
carried out by the Trading and Equity Sales Divisions. Thus, the total amount of variable
remuneration is determined by the division remaining within market risk limits, and the
profit obtained by unit of risk, the profitability of capital used for activities undertaken, and
maintaining the desired liquidity profile.
•
Risk adjustments after accrual
Regardless of the Identified Staff, the approach to be employed as the technique for
application of ex-post risk adjustment will be the malus and clawback methods.
Malus.
This is understood as any technique preventing the total or partial maturity of deferred
remuneration. In specific terms, this maturity is prevented in the following cases:
(i) Evidence of disloyal behaviour or serious error (for example, breach of internal
regulations, such as the Securities Market Internal Conduct Regulation or the Manual on
the Prevention of Money Laundering and Financing of Terrorism);
(ii) Evidence of the implementation of personal hedging or insurance strategies intended to
reduce risk adjustment effects in variable remuneration;
(iii) A significant decline in the financial performance of the bank or the corresponding
business unit;
(iv) A significant failure in risk management by the bank or the corresponding business unit; and
(v) Situations that jeopardise the fulfilment of the bank’s solvency objectives.
(vi) The existence of firm administrative penalties of legal convictions that may be
attributable to the unit or to the personnel responsible for the same.
(vii) The increase in the capital requirements of the bank or its unit that is not foreseen when
generating exposures.
Clawback.
The variable remuneration already paid to the members of the Identified Staff,
whether deferred or otherwise, shall be partially or totally recovered by Cecabank during the
deferral and withholding periods applied to the variable remuneration plus one additional year,
when it is demonstrated that the payment and, as such, the non-application of the adjustment
mechanisms, has been partially or totally been made based on information that has been
proven to be false or seriously inaccurate, a posteriori, or that risks arise that were assumed
during the period in question, or other circumstances that are unforeseen and unaccepted
by the bank that have a significant negative impact on the income statement of any of the
financial years in which the variable remuneration was applied.
11|11.1