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The European Banking Authority (EBA) has urged banks to adopt a conservative approach during awarding of bonuses, if not stopping them completely, to withstand the economic shock arising from the Covid-19 pandemic.

The EBA was quoted by Reuters as saying: “Remuneration and, in particular, its variable portion should be set at a conservative level.

“To achieve an appropriate alignment with risks stemming from the COVID-19 pandemic a larger part of the variable remuneration could be deferred for a longer period and a larger proportion could be paid out in equity instruments.”

Recently, the European Central Bank urged banks to halt dividends and share repurchase programmes until at least October.

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By GlobalData

The initiative is expected to reap savings of €30bn.

Instead, the EBA has asked banks to give the relief provided to them to fund companies and individuals.

Analysts are expecting a similar move by the Bank of England.

ABN Amro, Commerzbank as well as UniCredit, among others, have already halted plans to distribute dividends.

To give some breather to banks, the EBA has given banks an additional month to submit data related to capital and risks.

Usually, the data has to be submitted from March-May.

Besides, the regulator reportedly plans to scrap this year’s study on the effect of global capital and liquidity requirements on European banks.