France and Germany will rally EU finance ministers meeting in Brussels on Wednesday to take concrete action against big-bonus banking culture in preparatory talks ahead of a G20 summit on September 24-25 in Pittsburgh, US.
AFP - France and Germany will demand action not words from fellow EU nations in Brussels on Wednesday in their bid to crack down on banking's big-bonus culture, ahead of a G20 summit in the US.
EU finance ministers are beginning a series of meetings which will accelerate through G20 finance ministers' preparatory talks in London on Friday and Saturday and an anticipated full summit of EU leaders back in Brussels on September 17.
They want to hammer out red lines to take to Pittsburgh on September 24 and 25, for a summit aimed at curbing the kind of excesses which drove the global financial system to the verge of ruin late last year.
A public backlash at a return to multi-billion-euro or dollar bonus provisions among major banks in the US, Britain and also in France has been accompanied by pressure from political leaders already forced to apply huge bail-out funding in their financial sectors.
Efforts are focused on limiting bankers' bonuses, keeping a closer eye on trading in risky assets such as hedge funds -- a source of tension between the European Union and the US -- and ensuring that banks have sufficient capital to cover potential losses.
Also on the agenda is re-financing of the International Monetary Fund and discussions over exit strategies following massive stimulus efforts promoting fragile renewed growth in key economies, such as France and Germany.
The global cost of tackling climate change is another important consideration, ahead of a December gathering of world leaders in Copenhagen dedicated to the issue.
French president Nicolas Sarkozy met German chancellor Angela Merkel in Berlin on Monday, with a joint approach to the EU's Swedish presidency the first step.
Sarkozy boomed: "There is now a global public opinion. All over the world, people are sickened by the bonus system. We want to bring to an end the scandal of bonuses. We want it to stop."
Sarkozy had already said he would call for limits on bonuses in Pittsburgh. Indeed, he wants a mandatory cap on bonuses.
Merkel, who is standing for re-election two days after the G20 summit finishes, said measures on financial regulation agreed at a London G20 summit in April still had to be implemented "fully."
She highlighted a desire to ensure that "no bank can get so big that it can blackmail a government."
France wants the G20 to adopt a "more ambitious" stance, a French source told AFP, with the first step being a bid to persuade EU partners to adopt "similar measures" to those taken in Paris.
Sarkozy gave leading French bankers a personal and public dressing-down last week, and the source added that "more precise" targets covering "durations, quantities and limits" for bonuses had to be made clear.
But difficulties remain in convincing London, home to the lion's share of Europe's financial sector, to go as far as Sarkozy would like.
While British Prime Minister Gordon Brown on Tuesday pledged action on excessive bonuses, he said a mandatory cap would be difficult to enforce, according to an interview with the Financial Times.
"I think that is very difficult in an international environment. But there may be ways... that we could do better," said Brown, who visits Berlin on Sunday.
"I think you’ve got to be absolutely clear that remuneration has got to be based on long-term success, not short-term speculative deals, that there’s got to be a clawback system in remuneration itself so that if things are not working in year two then there is a clawback that is possible as an example," he added.
According to a European diplomatic source, London is waiting to see how the US position evolves -- with Washington having softened an initial stance of wanting to clamp down heavily on the issue.
Date created : 2009-09-01