HAMBURG, Germany—German Chancellor Angela Merkel and French President Nicolas Sarkozy have called for a stop to unjustified bonus payments for bankers after a meeting in Berlin this week.
“The speculative excesses, which caused the financial crisis, must not be repeated,“ said Sarkozy on Monday.
Merkel raised her concern over banks’ cross-border linkage, as well as about the sizes of the banks. “No bank must be allowed to get so big that it can get into a situation where it could blackmail governments,“ she said.
Merkel and Sarkozy want the European Union to adopt a common stance before the two-day G-20 meeting, which is to be held in Pittsburgh on Sept. 24.
Before the meeting, Sarkozy has already started to take initiative to make rules for banks stricter in France than in any other European country. “One cannot say, we will only act when others do so. This would mean that nobody takes action,“ the President said.
Since last week a bonus system guarantees payment only after long-term success. Bankers go without bonuses if they lose money, even after two or three years. They can be penalized for wrong decisions.
Sarkozy’s intention was to put pressure on the G20 to take action. He also wants to propose a limit for bonus payments at the G20. If an international approach to restrictions fails, French regulations won’t work either, since bankers will go to other countries to do business.
Experts believe that it is unlikely that all G20 countries will agree to the regulations, especially the U.K. and the United States, which fear that regulations could damage their financial centers.
“The speculative excesses, which caused the financial crisis, must not be repeated,“ said Sarkozy on Monday.
Merkel raised her concern over banks’ cross-border linkage, as well as about the sizes of the banks. “No bank must be allowed to get so big that it can get into a situation where it could blackmail governments,“ she said.
Merkel and Sarkozy want the European Union to adopt a common stance before the two-day G-20 meeting, which is to be held in Pittsburgh on Sept. 24.
Before the meeting, Sarkozy has already started to take initiative to make rules for banks stricter in France than in any other European country. “One cannot say, we will only act when others do so. This would mean that nobody takes action,“ the President said.
Since last week a bonus system guarantees payment only after long-term success. Bankers go without bonuses if they lose money, even after two or three years. They can be penalized for wrong decisions.
Sarkozy’s intention was to put pressure on the G20 to take action. He also wants to propose a limit for bonus payments at the G20. If an international approach to restrictions fails, French regulations won’t work either, since bankers will go to other countries to do business.
Experts believe that it is unlikely that all G20 countries will agree to the regulations, especially the U.K. and the United States, which fear that regulations could damage their financial centers.
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