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Page last updated at 18:35 GMT, Thursday, 10 December 2009

EU bankers' bonus tax plan gains momentum in Brussels

Gordon Brown, left and Fredrik Reinfeldt
Brown was welcomed at the summit by Swedish PM Fredrik Reinfeldt

Momentum is building for a tax on bankers' bonuses as European leaders gather for an EU summit in Brussels.

The leaders of France and Germany have swung behind the idea after the UK announced a one-off supertax on banker bonuses in a pre-Budget report.

The two-day summit will also address climate change and financing.

The European Council's meeting is the first since the Lisbon Treaty came into effect and Belgium's Herman van Rompuy was elected as its first president.

Ahead of the summit, UK Prime Minister Gordon Brown and French President Nicolas Sarkozy held talks which were expected to cover the controversial appointment of a Frenchman to oversee European banking.

Meanwhile, amid concerns across the continent about Greece's enormous level of debt, Prime Minister Fredrik Reinfeldt of Sweden, which currently holds the EU presidency, said the country's financial problems should be solved domestically.

Greece's Deputy Finance Minister Philippos Sachinidis said earlier his country's debt stood at 300bn euros ($442bn; £272bn) - its highest level in modern history.

Call to arms

Writing in Thursday's Wall Street Journal, Mr Sarkozy and Mr Brown said a one-off tax on bank bonuses should be "considered a priority".

Greenpeace activists in Brussels, Belgium, 10 December
There was a brief drama as Greenpeace activists breached security

It was "simply not acceptable" for taxpayers to cover the cost of bank failures but not benefit from their successes, they said.

The BBC's Jonny Dymond, in the Belgian capital, says the joint article at times reads like a call to arms.

In the letter, Mr Sarkozy and Mr Brown said the financial crisis has made them "recognise that we are now in an economy which is no longer national but global, so financial standards must also be global".

They said there was an "urgent need for a new compact between global banks and the society they serve".

People rightly want a post-crisis banking system which puts their needs first
Sarkozy/Brown joint article

Various proposals to reform the sector "deserve examination", they said, but a one-off tax on high bonuses paid to bankers "should be considered a priority".

In a separate development on Thursday, US bank Goldman Sachs revealed that its 30 top executives will receive restricted shares instead of cash bonuses in 2009.

The shares cannot be sold for five years.

The bank has been criticised for setting aside nearly $17bn (£10.5bn) in the first three quarters of 2009 to cover pay and bonuses.

UK Chancellor Alistair Darling said in his pre-Budget report on Wednesday that the new supertax would be paid by banks and not individuals.

It is designed to discourage institutions from paying large bonuses to employees in the wake of the major taxpayer support they have received in the financial crisis.

The plan has been warmly received in Paris and Berlin. German Chancellor Angela Merkel described it as an "attractive idea", while a French finance ministry official was quoted as telling the Associated Press news agency that France had already decided on a one-off tax for 2009 bonuses.

Big losers

Ahead of his meeting with Mr Brown, Mr Sarkozy had appeared to boast that a Frenchman's appointment to oversee European banking was a British defeat.

British PM Gordon Brown and French President Nicolas Sarkozy in Berlin (9 Nov 2009)
The leaders say only global change will restore confidence in banking

He told Le Monde newspaper the British were "the big losers" in the share-out of EU jobs after former French agriculture minister Michel Barnier was given the role of supervising Europe's internal market for financial services, most of which is in the City of London.

There was a moment of drama as EU leaders arrived for the twice-yearly Brussels summit as environmental protesters breached the security cordon disguised as an official delegation.

Several Greenpeace activists pulled up in a silver minivan similar to those used by summit attendees.

They burst out with banners reading "EU: Save Copenhagen" before they were moved aside by security guards.

They were urging EU nations to boost their commitments to achieve success at the ongoing global climate change conference in the Danish capital.



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