PARIS, Aug 25 – President Nicolas Sarkozy was to confront Paris bank executives Tuesday in a bid to convince French taxpayers and his fellow G20 leaders he is serious about cracking down on traders\’ bonuses.
The meeting was to be Sarkozy\’s first major engagement after coming back from holiday, and his seventh bnaking summit in a year of fraught relations with the financial sector following last summer\’s credit crunch.
The talks, due at 4.00 pm (1400 GMT) at the Elysee Palace in Paris, were also seen as a chance for him to affirm his status as a champion of regulation ahead of next month\’s G20 summit of leading economic powers.
"It\’s absolutely vital that all well-established international banks control their variable remunerations, which are often indecent, incomprehensible for others," said budget minister Eric Woerth.
"That creates a strong feeling of injustice," Woerth told the I-Tele news network, adding that Sarkozy would take up the matter with the bankers.
Following last year\’s global economic crash, Sarkozy called for stricter regulation of financial markets and an end to traders\’ bonus culture, which many blamed for the excessive risk-taking which caused the 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 executives 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.
"A lot of things have already been done, but we must go much further. We\’ll see what the bankers put on the table," said Frederic Lefebvre, spokesman for Sarkozy\’s right-wing UMP party, at a news conference on Monday.
"Our country, that\’s to say our political authorities, sets an example on the international stage. We need our banks to do the same," he warned.
For the Socialist opposition, former prime minister Laurent Fabius urged that bonuses above a certain sum — he suggested a million euros — be subject to a supertax and that bank shareholders set bonus levels.
"Bonuses are doubly harmful, firstly from an ethical standpoint," he told Europe 1 radio, "but also in terms of the general economic outlook, because, for example, traders have won a lot of money by betting on a slowdown."
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 at their September 24 summit in Pittsburghto agree a tighter international system of financial regulation, including commonly agreed limits on individual bonuses.