Brussels: European Union (EU) leaders will press their G-20 partners to introduce “sanctions” for banks that hand out excessive bonuses, according to a draft summit communique seen by AFP on Wednesday.
“The G-20 should commit to agreeing to binding rules for financial institutions on variable remunerations backed up by the threat of sanctions at the national level,” the draft said ahead of a special summit in Brussels.
The text will be put to the heads of the 27 EU member states meeting on Thursday evening to agree a common position to take to the G-20 summit in Pittsburgh gathering the world’s major economies next week.
Seeking new rules that “fulfil the commitment subscribed to in London” in April at the last G-20 summit, the EU bloc’s stance is that bonus pay in the financial sector should be tied to “long-term performance.”
Specifically, they also want to block the exercising of stock options over set timeframes and end the insulation of top directors from fall-out when banks fail, following a number of high-profile payouts to failed bank chiefs.
French President Nicolas Sarkozy has threatened to walk out of the Pittsburgh talks if the discussions on bonuses do not bear fruit, although his proposals for capping bonuses have met with reservations in Britain and the United States.
US President Barack Obama said on Monday Wall Street cannot return to high-risk operations and expect “taxpayers will be there to break their fall,” although experts expect resistance in Washington to heavy regulation.