September 3, 2009

Three in Europe unite on bonus pay

Britain, France and Germany united in a call for rules on bank bonus pay Thursday, issuing a joint letter calling for an international consensus.

A letter signed by British Prime Minister Gordon Brown, French President Nicolas Sarkozy and German Chancellor Angela Merkel called for binding rules that would tie the size of bonus checks to base salaries and long-term performances of the deals that generated the commission checks, the Financial Times reported.

In addition, the three leaders called for banks to defer bonus checks and include clawback provisions in contracts that allow banks to recover bonus pay if it was based on deals that later turned sour.

British Chancellor of the Exchequer Alistair Darling said, International co-operation is needed to prevent banks playing off one country against another, the Times reported.

Britain and France have rules limiting bonus checks. In the United States, Britain and elsewhere political maelstroms erupted through financial crisis of the past year as bailed out banks revealed huge bonus checks in the face of massive bank losses.

Group of 20 finance ministers are scheduled to meet in London Friday and Saturday to review policies in advance of a G20 meeting in Pittsburgh later this month.