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France urges world to follow banking bonus curbs
French President Nicolas Sarkozy has declared his country is setting a global example for cleaning up the banking system by introducing new rules limiting traders' bonuses.Sarkozy has challenged…
Lawyers Weekly
French President Nicolas Sarkozy has declared his country is setting a global example for cleaning up the banking system by introducing new rules limiting traders' bonuses.
"From now on the trader must wait three years to cash in on all of their bonus and if in the following two years their activity loses money, will not have his bonus," Sarkozy said.
"We will not work with banks that do not apply these rules."
The French banking union has agreed to implement the new rules with immediate effect. Sarkozy said compliance with the new rules would be monitored closely, and that banks would attract serious penalties for failure to comply, including being barred access to state activities such as privatisations.
Chief executive of BNP Paribas Baudouin Prot, whose bank has previously set aside bonus packages of €1bn ($1.7bn) for its highest paid executives, said the regulations were necessary but would only work if adopted globally.
"The difficulty is that this regulation cannot only be put in place in one single country," he said.
"It is naturally indispensable that such good practices be applied in all countries. It's a way of reducing the risks of new excesses and a new crisis."
