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France seeks curbs on bankers' bonuses

France seeks curbs on bankers' bonuses

French President Nicolas Sarkozy will meet banking chiefs on Tuesday as he seeks curbs on the the risk-taking bonus culture that is widely considering one of the causes of the global financial crisis.
The hot-button issue of bonuses, for years a debate in leftist French circles, was rekindled three weeks ago by reports that BNP Paribas SA has set aside around ⁈ion ($1.43 billion) for bonuses in its investment banking division.
The government injected ⁈llion into France's largest bank in a bid to keep it lending during the crisis. French banks Societe Generale, Credit Agricole and the parent company of Natixis were also helped by the government's ⁈lion scheme.
French government spokesman Luc Chatel said Tuesday ahead of the meeting that banks "mustn't act as if nothing has happened," adding that the crisis has shown the banks must change their modus operandi.
Sarkozy has argued since the crash for a stricter regulation of financial markets, and he wants world leaders to agree on global guidelines on bonuses at the G-20 summit of leading nations in Pittsburgh next September.
In an interview Tuesday with France-2 television, Chatel called on banks which received government help to grant loans to small businesses and individuals. He also said banks need to revise their remunerations to make them more transparent.
He said Sarkozy will insist on both points during a meeting later Tuesday with French bank officials.
The debate echoes public outrage in the United States, where banks have been criticized for paying out big bonuses while accepting taxpayer money.
Citigroup, which is now one-third owned by the government as a result of the bailout, gave 738 of its employees bonuses of at least $1 million, even after it lost $18.7 billion during the year.
In contrast, the outcry over 2009 bonus payments at BNP Paribas, which was profitable last year, came as it announced a net profit of ⁈llion ($2.3 billion) in the second quarter. The reported funds set aside for bonuses would work out at around ⁈ per employee, although payments will depend on the bank's performance over the rest of the year.
Jean-Claude Mailly, head of the Force Ouvriere workers union, called Tuesday for stricter rules over bonuses in an interview with Le Figaro newspaper.
Meanwhile, Paris Europlace, an organization which promotes Paris as a financial center, sought to ensure France remains competitive.
Gerard Mestrallet, the GDF Suez CEO who is president of Paris Europlace, said Monday that it is "essential that the new measures which may be applied to French banks are also applicable simultaneously at the international level, otherwise Paris risks loosing competitiveness and seeing activities and jobs shift to competing financial centers."
At the G-20 summit in April, world leaders agreed that banks should ensure that their "compensation structures are consistent with firms' long-term goals and prudent risk taking."


Updated : 2021-07-28 03:37 GMT+08:00