The RF Central Bank reconsidered the remuneration system of bank employees such that their remunerations will depend on the financial results of the bank’s activity. The RF Central Bank instruction No. 154-И (the "Instruction"), issued on June 17, 2014, is aimed at further securing the financial stability of Russian banks.

Pursuant to the Instruction, the non-fixed portion of salaries of executive bodies' members and other top managers whose activity may influence the results of a bank activity, should comprise at least 40% of their salary, while 40% out of the non-fixed portion shall be paid in installments within three years and shall depend on the actual results of work and other aspects of the bank activity, including the possibility of its reduction or cancellation.

At the same time, the fixed portion of salaries of the employees who are responsible for internal control and risk management should comprise at least 50% of their salary.

In order to ensure that these requirements are fulfilled, banks have now to disclose to the RF Central Bank information on the salaries of the employees subject to this remuneration system. Moreover, the RF Central Bank has established severe liability for non-compliance with the requirements or for presenting incorrect information, including: (1) fines from RUB 300,000 up to RUB 3 million; or (2) imposition of other sanctions (e.g., suspension of certain operations of the bank, etc.).

The Instruction will come into force on January 1, 2015.

RF Central Bank Instruction "On Assessment of the Remuneration System in a Bank Organization and Submission of Prescriptions on Elimination of Violations in the Remuneration System to a Bank Organization," dated June 17, 2014.