New rules for French banks limiting traders’ bonuses have been unveiled by President Nicolas Sarkozy and he wants the leaders of the G20 richest countries to do the same.
Speaking after meeting the heads of France’s biggest banks Sarkozy said bonuses now have to be linked to performance. He has been one of the most outspoken international critics of unrestrained financial market practices that have been widely blamed for encouraging the excessive risk-taking that contributed to the financial crisis. Sarkozy said: “Things can’t stay they same as they were. I have made that commitment to the French people, I won’t go back on that. It is a moral question and it’s something that is crucial to ensure financial stability.” The banks have agreed to spread compensation out over several years, to reflect long-term profits and reduce risky decision-making. They will also provide more information about how bonuses are awarded and traders will be penalised if they lose money for their banks The issue is expected to be high on the agenda at the G20 finance ministers and leaders’ gatherings in September. Sarkozy said he wants the G20 to tighten financial regulation internationally, including agreed limits on individual bonuses but will not back down on the new rules, even if other countries do not follow France’s example.