Who is considered to hold a key position at a bank, and what does that mean for staffing?

Until now, regulatory scrutiny has focused on the executive board and supervisory board. With CRD VI, another level is added: The Banking Directive now explicitly regulates the assessment of the suitability of individuals in key functions.

In Germany, this has been implemented through the BRUBEG. For the first time, the German Banking Act (KWG) introduces explicit suitability requirements for individuals who exercise significant influence over the management of the institution without being members of executive management or a supervisory body. The appointment and dismissal of these individuals must be reported. This primarily refers to the heads of internal control functions and the chief financial officer.

This may sound technical, but it represents a significant shift. Positions that were previously considered senior specialist roles – heads of risk control, compliance, internal audit, anti-money laundering officers, and heads of finance – are now subject to regulatory scrutiny.

We foresee three consequences for staffing these roles. The pool of candidates will narrow because formal qualifications must be verifiable and can no longer be substituted by long-term tenure with the company. The bargaining position of qualified candidates will improve because the same small group of individuals is in demand across Europe. And internal replacements will require more lead time because the notification becomes part of the process.

We advise firms to review their own key roles and answer three questions for each one: Who currently holds the position, how is their qualifications documented, and what happens if that person resigns tomorrow? In most firms, succession planning exists for the executive board but not for these other levels. This is where costs will rise in the future.