Sarkozy has been among the loudest international critics of unrestrained financial market practices and has seized on public outrage over the huge bonuses widely blamed for encouraging the excessive risk-taking that contributed to the financial crisis.
The issue was already addressed at a G-20 meeting in London earlier this year and is expected to be among the top issues at a meeting of G-20 finance ministers in London on Sept 4-5 and the leaders summit in Pittsburgh on September 24-25. This is a very big meeting because its going to sum up the position on the rules established at the meeting in London ahead of Pittsburgh, budget minister Eric Woerth told i-tele television before the bankers appointment with Sarkozy on Tuesday afternoon. The whole international financial community, all the well-established international banks, have to regulate variable compensation levels that are often indecent and incomprehensible, he said.
French banks adopted a code of good conduct based on broad G-20 guidelines in February in exchange for receiving billions of euros in liquidity support from the government aimed at ending huge guaranteed bonuses. But the debate in France was rekindled earlier this month when it emerged that BNP Paribas, had set aside 1 billion euros ($1.43 billion) for possible bonuses after reporting a 6.6% rise in second quarter profits.
There is heavy political pressure in France for action, particularly given concern that banks have been tight-fisted in lending to small companies, despite the massive injections of public support made available to the financial sector. The bankers met economy minister Christine Lagarde for preparatory talks on Monday.
But apart from personal pressure, it is unclear what concrete restrictions Sarkozy will be willing to impose given the risk of seeing traders decamp en masse to London or other cities, undermining Paris as a major financial centre. France banned stock options in pay packages for companies receiving state support until the end of 2010 but has not yet threatened to regulate bonuses, instead pressing for more transparency.