German Chancellor Angela Merkel and French President Nicolas Sarkozy meet for talks on Monday in Berlin, to prepare for a summit with fellow G20 leaders on September 24-25 in Pittsburgh, US.
German Chancellor Angela Merkel and French President Nicolas Sarkozy are to meet for talks Monday in Berlin, preparing for a summit with fellow G20 leaders on September 24-25 in Pittsburgh. Their goal is to close ranks on limiting bankers' bonuses and improving financial regulation.
Merkel’s spokesman Klaus Vater said Friday that Berlin fully “supports the French proposal for an international initiative on bankers bonuses.”
Sarkozy announced last week that he intended to exhort his G20 colleagues to limit banker bonuses on a global level. This came a day after France’s own announcement that its banks had accepted government proposals to limit trader bonuses.
At the moment, Germany only restricts employee income in those banks that receive direct government financing. In such cases, salaries are capped at 500,000 euros.
In a letter sent by German Finance Minister Peer Steinbrueck to his G20 counterparts, obtained by AFP on Monday, he stated: “Bankers should stump up for the consequences of the financial crisis…The broad majority of our citizens -- who are not among those responsible for the crisis -- now face enormous financial burdens.
"It is therefore of central importance that we arrive at a fair distribution of the burdens arising from the crisis and, in particular, that we enlist those who triggered the crisis in the financing of these burdens as well," he said.
Steinbrueck also said that he wants the G20 to take a "global approach" to do more to keep a lid on bankers' bonuses.
"Excessive bonus payments, of the type that we have again seen recently, make it very plain that we need to take action.
"These payments can scarcely be defended at a time when the financial system through the world has only survived thanks to huge levels of government support," he said.
He called for a cap on the share of bonuses in bankers' pay packages, for stock options to be held for a minimum of four years, for a clear link between the pay of top management and a firm's performance and for salaries to be published.
Sarkozy, who has sought to position himself as a champion of financial regulation, said last week he would propose in Pittsburgh "a strengthening of sanctions towards banks that do not play by the rules."
Last week Merkel said that she "of course" agreed with Sarkozy's proposals, saying she was "angry that some banks are starting over again just like before."
She continued: "This presents risks and this is why we should consider how we can intervene and limit" the bonuses, adding that the issue would be a "central theme" in Pittsburgh.
Steinbrueck also called on finance ministers to discuss international rules to facilitate the insolvency and liquidation of large banks in the event of another crisis.
He also said he would press for better international coordination on "exit strategies" from the massive stimulus efforts unrolled by governments around the world in order to avoid damaging inflationary effects in the longer term.
Date created : 2009-08-31