Sarkozy to call for cap on bank bonuses at G20
PARIS: President Nicolas Sarkozy said Wednesday he will call for limits on bonuses for bank traders as he takes his campaign for greater regulation of the global finance industry to next month's G20 summit.
The French leader was speaking a day after winning a commitment from French bankers for a system of performance-related pay for traders, part of a drive to reign in a bonus culture seen as a major factor in the global credit crunch.
"France will table an international initiative for the countries of the G20 to apply the rules for transparency, oversight and responsibility that are now in place on the Paris market," he said in an address to French ambassadors.
"We will propose a strengthening of sanctions towards banks that do not play by the rules and we will even raise the issue of limiting the size of bonuses," he added. "I see no reason why the issue should be taboo in Pittsburgh."
The G20 group of the world's biggest economies is to meet on September 24 in the US city of Pittsburgh to discuss new market regulations in the light of last year's economic meltdown.
Sarkozy, who has positioned himself as a champion of financial regulation, has said he is determined France should set the example to its G20 partners.
"If one of our partners disagrees with us, let him say so before the court of public opinion."
He warned that governments, having loaned billions to banks to see them through the credit crunch, would not accept a return to business as usual, and a culture of unregulated pay-outs.
"I will never forget the sleepless nights, when we had to find billions before the markets opened to save this or that bank," Sarkozy said.
"I will never accept that those who plunged us into the worst crisis since 1930 be allowed to do it again."
The French leader said "unthinkable progress" had been made over the past year, with a pledge by G20 leaders in April in London to crack down on tax havens.
But he warned Pittsburgh would be a "decisive step" in persuading fellow leaders to sign up to tough steps to end "the scandal of bonuses."
Sarkozy's position as a champion of regulation was undermined by news that one of its own banks, BNP-Paribas, had set aside a vast sum for bonuses and by warnings from bankers that Paris firms must compete with London and New York.
The president summoned financial executives Tuesday to lay out his demands from the French industry and plans for the G20 summit.
France's banking federation later confirmed its members had agreed to new restrictions, under which a two-third chunk of traders' bonuses would be made conditional on long-term bank results.
German Finance Minister Peer Steinbrueck said in an interview published Wednesday that he and his French counterpart Christine Lagarde had agreed to back international rules governing bonuses for bankers.
He said they would ask Britain to place the issue on the agenda of a G20 finance ministers meeting in London September 4 and 5.