France urges G20 to curb bank bonuses

• Source: Global Times
• [23:28 July 22 2009]
• Comments

Banks that resume guaranteed bonus payments are an “absolute disgrace” and must be reined in by G20 leaders, the Financial Times quoted France's Finance Minister Christine Lagarde as saying yesterday.

It quoted Lagarde as saying in an interview that G20 governments meeting in September should introduce curbs on pay practices deemed as encouraging too much risk-taking.

“It is an absolute disgrace that guaranteed bonuses of several years could still be paid, or that some people are thinking of reinstating the old ways of compensating with in-sufficient relationship between compensation and lasting performance and risk management,” Lagarde said.

The newspaper said several international banks have offered multi-year guarantees to recruit and retain staff, although they say the practice has been limited to top talent.

The French government said in March it was limiting executive bonuses by banning stock options and stock grants in companies receiving state support, banning bonuses that are not linked to set targets and preventing targets from being linked to its share price.

Britain's financial watchdog warned banks Monday that guaranteed bonuses that last longer than a year will break proposed rules on remuneration due to come into force next year.

Lagarde said that all leading economies should quickly adopt similar principles to those laid out by the Financial Stability Board, an international forum that will police consistency in financial rules across the globe.

“We have the rules now ... The utmost priority should be given to their implementation,” she said.

Reuters