UAE Central Bank introduces new remuneration regulation for banks and insurance companies

The UAE Central Bank (CBUAE) has issued a new Remuneration Regulation for Banks and Insurance Companies (Circular No. 5/2026 (Regulation)), introducing minimum requirements for remuneration frameworks applicable to banks, insurance companies and reinsurance companies regulated by the CBUAE. The Regulation came into effect from 14 April 2026.

The Regulation forms part of the UAE’s wider corporate governance and risk management framework and is aimed at ensuring remuneration structures appropriately reflect risk outcomes, prudent management and long-term performance.

Key employment and HR implications

From an employment perspective, the Regulation places increased focus on remuneration governance, performance-linked pay and accountability mechanisms for senior and risk-facing employees.

In particular, regulated employers must maintain Board-approved remuneration frameworks and policies aligned with:

• long-term strategic objectives;
• prudent risk-taking;
• effective risk management; and
• sound corporate governance principles.

The Regulation adopts a clear “risk-adjusted remuneration” approach. Variable remuneration arrangements must not incentivise inappropriate or excessive risk-taking and should reflect long-term performance outcomes rather than short-term financial results alone.

Focus on “Material Risk Takers”

The Regulation requires employers to identify employees classified as:

• “Material Risk Takers”;
• “Senior Material Risk Takers”; and
• employees working in control functions, including compliance, risk and internal audit.

This may include employees with authority over significant lending, underwriting, investment or non-standard risk decisions, as well as certain highly remunerated employees.

Once identified, these employees may become subject to enhanced remuneration governance requirements.

Malus and clawback provisions

The Regulation expressly requires mechanisms allowing employers to:

• reduce or cancel deferred variable remuneration (malus); and
• recover paid or vested variable remuneration in certain circumstances (clawback).

As a result, employers may need to review bonus plans, deferred compensation arrangements, LTIPs and employment contract drafting to ensure appropriate recovery and adjustment mechanisms are included.

Governance and review obligations

The Regulation also imposes enhanced governance requirements, including:

• annual reviews of remuneration framework effectiveness and compliance;
• independent comprehensive reviews at least every three years; and
• Board, remuneration committee, risk committee and senior management oversight responsibilities.

Control functions and HR are also expected to play an active role in remuneration governance and monitoring.

Practical considerations for employers

Banks and insurance companies regulated by the CBUAE should consider reviewing:

• remuneration and bonus structures;
• performance management criteria;
• deferred compensation arrangements;
• malus and clawback drafting;
• governance committee terms of reference;
• identification processes for material risk takers; and
• employment contracts and policies for senior and regulated employees.

The Regulation reflects increasing regulatory focus on linking remuneration outcomes to both financial and non-financial risk outcomes, including conduct and governance considerations.

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