Rest of Africa
Botswana
Has the regulator implemented rules in relation to remuneration paid by banks to its staff?
No.
What categories of staff are caught by the regulator’s rules?
Not applicable.
What are the key regulatory rules?
Not applicable.
Are bonuses subject to the regulator’s rules?
Not applicable.
What is the position concerning role based allowances?
Not applicable.
Must an institution’s remuneration policy be disclosed to the regulator?
Not applicable.
Do the regulator’s rules on remuneration have extraterritorial effect?
Not applicable.
Do you anticipate further reform in this area?
Until such time as the Banking Supervision Department’s Annual Report for 2014 is published on the Bank of Botswana website, it is unknown what reforms might be imminent.
Contributed by: Khan Corporate Law
Kenya
Has the regulator implemented rules in relation to remuneration paid by banks to its staff?
There are no specific rules implemented by Central Bank of Kenya (CBK) in relation to the remuneration paid by banks to its staff.
There are however certain provisions of the Central Bank of Kenya Prudential Guidelines, January 2013 (Prudential Guidelines) relating to Corporate Governance (CBK/PG/02). Under CBK/PG/02 a bank’s board is responsible for and is required to actively oversee the banks compensation system’s design and operation. The bank’s board must monitor the compensation system to ensure it operates as intended and review it accordingly. While CBK/PG/02 provides that a bank’s board may constitute a compensation or remuneration committee, CBK requires this committee to be formed by the bank’s board as an integral part of the governance structure to oversee the bank’s compensation system. Members of the compensation committee are required to be independent non-executive directors with substantial knowledge about compensation arrangements, incentives and risks arising from such compensation arrangements. The bank’s board is required to formulate a policy for the remuneration of directors, the chief executive officer and senior management of the bank. The remuneration of such directors should be sufficient enough to attract and retain directors of high caliber at the same time balancing the need to ensure that the bank’s funds are not used to subsidize excessive remuneration packages and compromising the bank’s viability, solvency and reputation.
CBK/PG/02 also sets out certain requirements which the banks should take into account when designing their compensation systems.
What categories of staff are caught by the regulator’s rules?
As noted in response to question 1 above, there are no specific rules in relation to the remuneration paid by banks to their staff. The requirements capture various officers of a bank including:
- chief executive officer;
- directors;
- senior management;
- chief risk officer and risk management staff; and
- the bank’s staff generally.
What are the key regulatory rules?
There are no specific rules in relation to the remuneration paid by banks to their staff.
Are bonuses subject to the regulator’s rules?
Not applicable.
What is the position concerning role based allowances?
Not applicable.
Must an institution’s remuneration policy be disclosed to the regulator?
There is no specific requirement for a bank’s remuneration policy to be disclosed to CBK.
Banks are however required to disclose certain information in relation to a bank’s compensation in their annual reports.
Do the regulator’s rules on remuneration have extraterritorial effect?
Not applicable.
Do you anticipate further reform in this area?
We are not aware of proposed reforms in this area.
Contributed by: Kaplan & Stratton
Namibia
Has the regulator implemented rules in relation to remuneration paid by banks to its staff?
No rules or legislation relating to the determination of remuneration of banking staff have been issued or implemented.
Remuneration is briefly dealt with in a gazetted determination in terms of the Banking Institutions Act No. 2 of 1998, contained in the Determinations On The Appointment, Duties and Responsibilities of Directors and Principal Officers of Banking Institutions – BID 1 of June 2, 1998: Section 6 – Remuneration
“The remuneration of the directors and principal officers shall not be out of line with the nature and size of operations of a banking institution. The directors and principal officers shall not avail themselves of unreasonable bountiful remuneration, with excessive bonuses and fringe benefits relative to the profits and operations of the banking institution.”
What categories of staff are caught by the regulator’s rules?
There are no regulations in this regard. The categories of staff are set out in terms of the Determinations On The Appointment, Duties and Responsibilities of Directors and Principal Officers of Banking Institutions.
What are the key regulatory rules?
No regulatory rules have been issued.
Are bonuses subject to the regulator’s rules?
No regulatory rules have been issued.
What is the position concerning role based allowances?
There are no regulations in this regard.
Must an institution’s remuneration policy be disclosed to the regulator?
No disclosure requirements exist.
Do the regulator’s rules on remuneration have extraterritorial effect?
No.
Do you anticipate further reform in this area?
No reforms are anticipated at this present time, according to a representative of the Bank of Namibia.
Contributed by: Engling, Stritter and Partners
Nigeria
Has the regulator implemented rules in relation to remuneration paid by banks to its staff?
Banks and other Financial Institutions Act (BOFIA)
Nigerian banks are primarily supervised by the Central Bank of Nigeria (CBN) pursuant to the powers conferred on the Central Bank under BOFIA to regulate banking and related activities in Nigeria. There is no specific power or authority vested in the CBN to make or implement any rules regarding the remuneration paid by banks to its staff in Nigeria. However, CBN issued a mandatory code of corporate governance applicable to Nigerian Banks which contain certain compliance provisions regarding the remuneration of the management of the Bank as follows, the remuneration of:
- executive directors are to be determined by a committee of non-executive directors (Article 5.3.7 of the CBN Code for Corporate Governance); and
- non-executive directors are to be limited to sitting allowances, directors’ fees and reimbursable travel and hotel expenses (Article 5.3.9 of the CBN Code for Corporate Governance).
Nigerian employment practices are however regulated by the Labor Act (CAP L1 Laws of the Federation of Nigeria, 2004).
Securities and Exchange Commission (Code of Corporate Governance) (CCG)
Remuneration for executive directors of public companies is to be performance driven and restricted to base salaries, allowances, performance bonuses and share options. Executive directors are not entitled to sitting allowances (Article 5 of the CCG).
Article 14 of the CCG deals with the remuneration of the board of directors (the Board) of a public company. It sets out the following rules:
- The company’s remuneration policy should: define the criteria and mechanism for determining levels of remuneration and the frequency for review of such criteria and mechanism;
- define a process, if necessary with the assistance of external advisers, for determining executive and non-executive directors’ compensation; and
- provide how and to what extent executive directors’ reward should be linked to corporate and individual performance.
- The Board should approve the remuneration of each executive director including the CEO individually taking into consideration direct relevance of skill and experience to the company at that time.
- Only non-executive directors should be involved in decisions regarding the remuneration of executive directors.
- Where share options are adopted as part of executive remuneration or compensation, the Board should ensure that they are not priced at a discount except with the authorization of the SEC. Any such deferred compensation should not be exercisable until one year after the expiration of the minimum tenor of directorship.
Where share options are granted as part of remuneration to directors, the limits should be set in any given financial year and subject to the approval of the shareholders in general meeting.
What categories of staff are caught by the regulator’s rules?
Banks and other Financial Institutions Act
The CBN Code of Corporate Governance in the Banking Industry limits its regulatory scope to the remuneration of the management cadre (executive and non-executive directors) of the banking staff.
Securities and Exchange Commission (Code of Corporate Governance)
The SEC CCG seeks to focus on and govern the remuneration of Directors and senior management staff employed in public companies in Nigeria.
What are the key regulatory rules?
No.
Are bonuses subject to the regulator’s rules?
Generally, the payment of bonuses to bank employees does not fall within the ordinary ambit of regulatory control. However, applicable corporate governance codes require the disclosure of payments made to the directors of public companies in the company’s annual reports.
What is the position concerning role based allowances?
Specifically, executive directors of public companies are not entitled to sitting allowances (Article 5 of the CCG).
Must an institution’s remuneration policy be disclosed to the regulator?
Nigerian law does not ordinarily require banks or any financial institution to disclose its remuneration policy to the regulator. However, the Central Bank may in the exercise of its wide supervisory authority, require a bank to disclose specific information regarding its remuneration policy.
In respect of public companies, Article 14.10 of the SEC CGG requires that the company’s remuneration policy and all material benefits and compensation (which may include stock options and bonuses) paid to directors to be published in the company’s annual report.
Do the regulator’s rules on remuneration have extraterritorial effect?
Nigerian laws are generally territorial in scope and application.
Do you anticipate further reform in this area?
There are presently no indications from legislative or regulatory activity that there would be further reforms to the regulation of remuneration in the banking industry in Nigeria.
Contributed by: Alliance Law Firm
Tanzania
Has the regulator implemented rules in relation to remuneration paid by banks to its staff?
There are no specific banking sector regulations, however the Labor Institutions Wage Order 2013 which came into force on July 1, 2013 provides for the minimum wages sector wise (including the financial sector).
What categories of staff are caught by the regulator’s rules?
Not applicable.
What are the key regulatory rules?
Not applicable.
Are bonuses subject to the regulator’s rules?
Not applicable.
What is the position concerning role based allowances?
Not applicable.
Must an institution’s remuneration policy be disclosed to the regulator?
Not applicable.
Do the regulator’s rules on remuneration have extraterritorial effect?
Not applicable.
Do you anticipate further reform in this area?
Not applicable.
Uganda
Has the regulator implemented rules in relation to remuneration paid by banks to its staff?
The Regulator has not implemented any rules in relation to the remuneration paid by banks to its staff. However the Regulator carries out annual surveys of the different banks’ systems and as a governance issue the regulator may query any remuneration if it is found that the same is questionable (either too high or too low).
What categories of staff are caught by the regulator’s rules?
Not applicable.
What are the key regulatory rules?
Not applicable.
Are bonuses subject to the regulator’s rules?
Not applicable.
What is the position concerning role based allowances?
The Regulator has not implemented any rules concerning role based allowances.
Must an institution’s remuneration policy be disclosed to the regulator?
There is no requirement to disclose the remuneration policy to the regulator. However, the regulator is obligated to survey all the banks systems, including the remuneration policy, on an annual basis.
Do the regulator’s rules on remuneration have extraterritorial effect?
Not applicable.
Do you anticipate further reform in this area?
Not at the moment. However these rules are reviewed on an annual basis (at the end of every financial year).
Contributed by: Shonubi Musoke & Co
Zambia
Has the regulator implemented rules in relation to remuneration paid by banks to its staff?
The regulator (Bank of Zambia) has not implemented any rules in relation to remuneration paid to bank employees. The remuneration paid by a bank to each employee is subject to specific employer-employee contracts negotiated by the parties.
What categories of staff are caught by the regulator’s rules?
The regulator has not provided any rules.
What are the key regulatory rules?
There are no key regulatory rules.
Are bonuses subject to the regulator’s rules?
No.
What is the position concerning role based allowances?
Any provisions with respect to allowances (if any) are governed by specific employer-employee contracts that a bank may have entered into with individual staff.
Must an institution’s remuneration policy be disclosed to the regulator?
An institution’s remuneration policy need not be disclosed to the regulator.
Do the regulator’s rules on remuneration have extraterritorial effect?
No.
Do you anticipate further reform in this area?
We do not anticipate any or further reform in this area.
Contributed by: Corpus Legal Practitioners
Zimbabwe
Has the regulator implemented rules in relation to remuneration paid by banks to its staff?
Neither the Banking Act nor the Reserve Bank of Zimbabwe Act contain provisions relating to the regulation of the remuneration of employees in the banking sector by the regulator. The position has been confirmed with the Reserve Bank of Zimbabwe who indicated that the RBZ simply monitors the governance policies of the banks but issues relating to salaries and benefits are determined internally by the individual banks with no interference from the RBZ.
The only statutory provisions relating to remuneration of employees in the banking sector are found in the Collective Bargaining Agreement: Banking Undertaking 273/2000 and the Collective Bargaining Agreement: National Employment Council Banking Industry 150/2013 which state that employees should be placed in grades and paid a salary or wage of at least the amount prescribed for such a grade.
What categories of staff are caught by the regulator’s rules?
Not applicable.
What are the key regulatory rules?
Not applicable.
Are bonuses subject to the regulator’s rules?
Not applicable.
What is the position concerning role based allowances?
Not applicable.
Must an institution’s remuneration policy be disclosed to the regulator?
Not applicable.
Do the regulator’s rules on remuneration have extraterritorial effect?
Not applicable.
Do you anticipate further reform in this area?
Not applicable.
Contributed by: Gill, Godlonton, Gerrans