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The Rapporteur is convinced that the financial and economic crisis has revealed the lack of effectiveness of existing corporate governance principles based on a 'comply or explain' approach. He is in favour of the Commission's proposal and highlights that the spirit of the European Parliament's demands as submitted through the Initiative Report on Economic Governance in Financial Institutions - taking into account long-term interest of institutions, disclosures and vesting periods - have been respected. Corporate governance provisions have to ensure that there is no conflict of interest, remuneration policy is aligned with the long term interest of an institution. An idea that is worth discussing during the legislative process is the establishment of an absolute cap on the top salaries in relation to the average salary of each financial institution. The Rapporteur stresses that corporate governance systems differ among Member States and the Commission proposal is modelled on the one-tier system only, where both executive and supervisory functions are exercised by one body. He therefore deemed it necessary to adapt the provisions to the two-board system by clarifying the term "management board". In this concept, the supervisory board has no direct oversight of the senior management, and only the executive board has the power to issue binding instructions in relation to managers and employees.
The introduction of two capital buffers is meant to attenuate the risk of pro-cyclicality and limit an excessive build up of leverage. The Capital Conservation Buffer is applied uniformly, whereas the Countercyclical Buffer will be set by national authorities within a range of 0 and 2.5 per cent of risk-weighted assets. Competent authorities can go beyond if justified. As Member States have to recognise mutually a buffer up to a percentage of 2.5 per cent, the Rapporteur deems it necessary to create legal security when it comes to the variables which are used to setting the buffer rate.
Draft report – Directive
Draft report – Regulation