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Business

Sarkozy steps into debate, calls for talks on 25 August

Video by FRANCE 2 , Rachel MARUSAK

Text by NEWS WIRES

Latest update : 2009-08-07

French bankers gathered at the PM's office Friday to discuss guidelines regarding bonuses, and President Sarkozy released a statement calling on banks to conform with G20 rules. Sarkozy will hold a conference on the key bonus issue later this month.

AFP - President Nicolas Sarkozy took a break from his holiday on Friday to issue a stern warning to the French banking sector, amid mounting controversy over a new round of bonuses for traders.

Sarkozy's letter, issued from his Mediterranean holiday retreat, came as Prime Minister Francois Fillon's office held a hastily organised meeting of bank executives in Paris to remind them of their responsibilities.

France has championed new guidelines on bankers' perks agreed at the G20 summit in London, and Sarkozy instructed central bank governor Christian Noyer "to apply the relevant rules with rigour, notably on the question of pay."

He also announced that representatives of the French financial sector would be called to attend a meeting with himself and ministers on August 25, to again remind them of their obligations following last year's state bail-out.

Faced with the global credit crunch in 2008, Sarkozy's government made more than 20 billion euros of taxpayers' money available for loans to bail out struggling banks and maintain a flow of credit to companies and consumers.

In return, the state expected bankers to rein in the risky, over-leveraged derivatives trading of recent years, and reform the bonus-driven culture of its executives. G20 leaders agreed limitations on some forms of bonus schemes.

Nevertheless, it was revealed this week that French bank BNP-Paribas intends to pay its staff a total of more than one billion euros in bonuses this year, just months after it received a 5.1 billion euro loan from the state.

The decision was seized upon by Sarkozy's left-wing opponents, and the head of state is keen to damp down the controversy while reaffirming his promise of tighter global regulation ahead of the G20 meet in Pittsburgh next month.

Sarkozy said that he would write to the leaders of the world's top 20 economies at the coming weeks, underlining his determination to get them to agree to restrictions on bonuses at the Septmber 23 summit.

Meanwhile, Fillon's deputy chief of staff Antoine Gosset-Grainville was meeting Friday with the chairmen and chief executives of France's major high street banks at the prime minister's office in Paris.

Date created : 2009-08-07

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