Page last updated at 16:47 GMT, Tuesday, 25 August 2009 17:47 UK

French banks back bonus reforms

President Sarkozy
President Sarkozy wants tighter control on bank bonuses

French banks have agreed to bring in a new system of performance-related pay, following controversy over the high levels of bonuses paid to traders.

France's banking federation said there would be penalties for those who lost money as well as rewards for success.

The statement came after bank officials held talks in Paris with President Nicolas Sarkozy.

President Sarkozy asked the banks to report to him on their bonus policies amid pressure to curb excesses.

In April, G20 leaders pledged to apply tough new policies on compensation.

Mr Sarkozy said after the meeting that he would continue to press for tougher controls on bankers' bonuses at the next G20 summit in the US city of Pittsburgh in September.

Public disquiet

Bonuses have been a source of contention, not just in France, but also in other European nations and the US.

There has been public disquiet that leading banks, which have been seen as a major cause of the financial crisis, have been receiving taxpayer funds, but are not prepared to change their traditional culture of awarding big bonuses to key staff.

The US House of Representatives recently voted in favour of laws to stop banks paying bonuses that promote excessive risk-taking.

The vote came after a report suggested that Wall Street banks that were bailed out by the government gave executives bonuses regardless of performance.



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