EU plans to push for G20 bank bonus ‘sanctions’, curb options
European Union leaders will press their G20 partners to introduce "sanctions" for banks that hand out excessive bonuses, according to a draft summit communique seen by AFP on Wednesday.india Updated: Sep 16, 2009 23:08 IST
European Union leaders will press their G20 partners to introduce "sanctions" for banks that hand out excessive bonuses, according to a draft summit communique seen by AFP on Wednesday.
"The G20 should commit to agreeing to binding rules for financial institutions on variable remunerations backed up by the threat of sanctions at the national level," the draft said ahead of a special summit in Brussels.
The text will be put to the heads of the 27 EU member states meeting on Thursday evening to agree a common position to take to the G20 summit in Pittsburgh, Pennsylvania on September 24 and 25.
Seeking new rules that "fulfil the commitment subscribed to in London" in April at the last G20 summit, the EU bloc's stance is that bonus pay in the financial sector should be tied to "long-term performance."
They also want to block the exercising of stock options over set timeframes and end the insulation of top directors from fall-out when banks fail, following a number of high-profile payouts to failed bank chiefs.
French President Nicolas Sarkozy has threatened to walk out of the Pittsburgh talks on September 24 and 25 if serious bonus curbs are not implemented, although Washington has so far resisted heavy regulation. While Sarkozy's proposals for capping bonuses have met with reservations in Britain, US President Barack Obama on Monday warned that Wall Street executives can no longer expect taxpayers "to break their fall."
Dutch banks last week unilaterally imposed limits on executive bonuses and salaries in what the Netherlands said could be a model for G20 action.
In its new banking code, bonuses will no longer be allowed to exceed annual salaries as of January and salaries themselves will have to be below a median figure for comparable jobs.
There will also be a provision for clawback if a bank runs into trouble with pay-offs restricted to a maximum of one year's salary and top directors prevented from exercising stock options for three years.
The final text from Thursday's EU dinner summit can change, but the draft already goes further than a deal reached between G20 finance ministers at a preparatory meeting in London on September 5.