Finance Ministers of the Member States of the European Union to develop a unified approach to the bonus payments in the banking sector, based on the proposals of France, writes The New York Times (NYT).
At the upcoming G20 summit in Pittsburgh, Europeans will demand from the U.S. and other countries hard-line policy and transparent management of banking bonuses.
However, ministers did not say what measures were agreed upon. According to Deputy Minister of Finance of Germany Jörg Asmussen, the EU wants to tie bonuses to the results of the bankers.
French Finance Minister Christine Lagarde said in Paris that the proposals were endorsed unanimously by her colleagues from the rest of the eurozone countries and found considerable support at the meeting of finance ministers from all 27 EU states.
France has already taken steps to limit the bonuses in the banking sector, the country's largest banks have agreed to comply with new rules. Bonuses will now be paid at once, and for three years, which will assess the quality of bank staff and senior management over a longer period of time.
United Kingdom, did not take part in the discussion expressed, is expected to present new proposals at a meeting of finance ministers and heads of central banks G20 4-5 September in London.
According to the NYT sources in the British government, the United Kingdom wants banks to pay bonuses to its top managers within 5 years after the year to which they relate. However, after the first year there can be no guarantee bonuses. Part of premium must be given options or other non-monetary form. If you eventually find that the results of a top manager left much to be desired, the bank will be able to withdraw his bonus partially or completely.
In a Financial Times interview this week, British Prime Minister Gordon Brown supported the idea of paying bonuses in installments over several years. He noted, however, that would be very difficult to limit bonuses in an international scale.
United Kingdom also seeks to expand the powers of regulators: if the bonus bank is a risky practice, the demands on its capital and reserves should be more stringent.
Britain is interested in putting an end to the practice of short-term bonuses and payments, which threaten the stability of the financial system. We need a viable and global-scale measures reflecting the global nature of the financial services market, - says NYT representative of the British Government, who wished to remain anonymous.
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