EU plans to revisit bank rulebook on bonuses and market risk regulations

EU plans to revisit bank rulebook on bonuses and market risk regulations The European Commission is reopening its banking playbook, targeting the controversial bonus cap and market risk capital rules in a bid to keep EU banks competitive globally. Share Add us on Google by Editorial Team Jun. 18, 2026 The European Commission is taking a hard look at two of its most debated banking regulations: the cap on banker bonuses and the market risk capital requirements that govern how banks handle their trading books.

The review, launched as a targeted consultation on February 11, 2026, represents Brussels’ clearest acknowledgment yet that its regulatory framework might be putting EU banks at a disadvantage. The consultation runs until April 19, 2026 and focuses squarely on the EU’s single rulebook, the unified set of rules that governs how banks across the bloc operate. Two areas are getting the most attention: remuneration rules that limit how much bankers can earn in bonuses relative to their fixed pay, and the Fundamental Review of the Trading Book, or FRTB, which dictates how much capital banks must hold against market risk.

The bonus cap problem The EU’s bonus cap has been a sore spot since it was introduced during the CRD IV era back in 2013. The rule limits variable pay relative to fixed pay for bankers, and it was designed to curb the kind of reckless risk-taking that contributed to the 2008 financial crisis. Advertisement The UK scrapped its own version of the bonus cap after Brexit.

That means London-based banks can now offer more flexible compensation packages, making it easier to attract and retain top talent. The European Banking Federation, the Association for Financial Markets in Europe, and the International Swaps and Derivatives Association have all flagged this as a serious competitiveness issue. The irony is that the bonus cap didn’t really reduce total pay.

Banks simply raised fixed salaries to compensate, which actually made their cost bases less flexible and harder to cut during downturns. Market risk and the FRTB On June 4, 2026, the EU adopted adjustments to the FRTB market risk framework. These changes are set to take effect on January 1, 2027 and will remain in place for three years.

The timing matters because the EU is trying to align with Basel standards, the international benchmarks for bank regulation, while simultaneously acknowledging that strict implementation could handicap its own institutions. Industry groups have argued that the EU’s implementation timeline for FRTB has been too aggressive compared to other jurisdictions. Disclosure: This article was edited by Editorial Team.

For more information on how we create and review content, see our Editorial Policy. MACRO EU plans to revisit bank rulebook on bonuses and market risk regulations The European Commission is reopening its banking playbook, targeting the controversial bonus cap and market risk capital rules in a bid to keep EU banks competitive globally. by Editorial Team Just now ago Share Add us on Google The European Commission is taking a hard look at two of its most debated banking regulations: the cap on banker bonuses and the market risk capital requirements that govern how banks handle their trading books.

The review, launched as a targeted consultation on February 11, 2026, represents Brussels’ clearest acknowledgment yet that its regulatory framework might be putting EU banks at a disadvantage. The consultation runs until April 19, 2026 and focuses squarely on the EU’s single rulebook, the unified set of rules that governs how banks across the bloc operate. Two areas are getting the most attention: remuneration rules that limit how much bankers can earn in bonuses relative to their fixed pay, and the Fundamental Review of the Trading Book, or FRTB, which dictates how much capital banks must hold against market risk.

The bonus cap problem The EU’s bonus cap has been a sore spot since it was introduced during the CRD IV era back in 2013. The rule limits variable pay relative to fixed pay for bankers, and it was designed to curb the kind of reckless risk-taking that contributed to the 2008 financial crisis. Advertisement The UK scrapped its own version of the bonus cap after Brexit.

That means London-based banks can now offer more flexible compensation packages, making it easier to attract and retain top talent. The European Banking Federation, the Association for Financial Markets in Europe, and the International Swaps and Derivatives Association have all flagged this as a serious competitiveness issue. The irony is that the bonus cap didn’t really reduce total pay.

Banks simply raised fixed salaries to compensate, which actually made their cost bases less flexible and harder to cut during downturns. Market risk and the FRTB On June 4, 2026, the EU adopted adjustments to the FRTB market risk framework. These changes are set to take effect on January 1, 2027 and will remain in place for three years.

The timing matters b