French President Nicolas Sarkozy told a group of senior bankers that he sees "bad habits resurfacing" regarding compensation for traders. Sarkozy said he would press calls for tougher international regulation at a G20 summit in the autumn.
AFP - President Nicolas Sarkozy confronted French bank executives over bonuses Tuesday, as he sought to position himself as a champion of greater market regulation ahead of next month's G20 summit.
"The issue of traders' remuneration is an essential part of ensuring that the crisis we're going through is not repeated," the French leader told a gathering of senior bankers summoned to his Elysee Palace office.
"But just as we are seeing the first signs of a return to stability, we also see the bad habits resurfacing. I can't accept this," he said, according to a summary of his opening remarks released by his office.
Sarkozy told the industry chiefs that he wanted them to help draw up a new French plan to better regulate financial markets -- including limits on bonuses -- that he could present to the G20 summit in Pittsburgh on September 24.
"The problem is international and should be dealt with internationally, but France will not settle for the lowest common denominator, nor will it wait before acting," he warned. "French banks should adopt exemplary behaviour.
"Let's discuss national measures that we can take immediately," he said.
The meeting was Sarkozy's first major engagement after coming back from holiday, and his seventh banking summit in a year of fraught relations with the financial sector following last summer's credit crunch.
"He is totally determined," government spokesman Luc Chatel said.
"He will have a strong message to take to the summit in Pittsburgh. France is leading this fight, which is a fight for more international financial regulation, for restrictions on remuneration," he said.
Following last year's global economic crash, Sarkozy called for stricter regulation of financial markets and an end to traders' bonus culture, which many blame for the excessive risk-taking which caused the economic collapse.
France's position has been undermined, however, by news that at least one of its own banks has already set aside a vast sum for bonuses and by warnings from bankers that Paris traders' earnings must compete with London and New York.
So far, French banks have promised to abide by recommendations agreed by the G20 leaders at their last meeting in London in April, restricting guaranteed bonuses and tying pay-outs more closely to long-term performance.
But these limitations did not prevent BNP-Paribas from setting aside around one billion euros (1.43 billion dollars) in bonuses for its traders, a sum which angered French voters and inspired Sarkozy to call Tuesday's talks.
The bankers refused to comment on Monday after three hours of talks with Finance Minister Christine Lagarde, but their lobby group warned that if they did not pay traders enough they could lose staff to London or New York.
"It's essential that any new measures that could be imposed on French banks are applied equally and simultaneously at an international level," said Gerard Mestrallet of Paris Europlace, which promotes the French financial sector.
"Otherwise, the Paris marketplace runs the risk of a loss of competitivity in its business and a loss of jobs to its rivals," he insisted.
Sarkozy hopes to convince his G20 partners to agree a tighter international system of financial regulation, including commonly agreed limits on individual bonuses, despite reticence in Washington to accept non-US rules.
Date created : 2009-08-25