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Banker bonus sparks anger in France

(Agencies)
Updated: 2009-08-07 21:16

PARIS: French President Nicolas Sarkozy wants to meet with leaders at BNP Paribas SA, his office said Friday, after a report that the bank had earmarked euro 1 billion ($1.44 billion) in extra compensation sparked populist anger.

Sarkozy hopes to meet with the bank's leaders August 25, the day of the first Cabinet meeting after the summer break, his offics said in a statement.

The bankers already met Friday at the prime minister's office as the government sought assurances that compensation packages will meet guidelines agreed upon at the G20 summit in London.

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The long-running debate over bonuses in France was rekindled Wednesday after a report in France's left-leaning Liberation newspaper calculated that BNP Paribas has set aside around euro 1 billion to reward the 17,000 employees of its corporate and investment banking division - or around euro 59,000 per employee.

The head of the rival Socialists, Martine Aubry, dubbed the sum a "scandal" after billions of euros in government aid were spent keeping banks afloat during the financial crisis.

France's top six banks, including giants BNP Paribas and Societe Generale, are recipients of the country's euro 360 billion bank bailout package, euro 320 billion of which was in loan guarantees. Sarkozy had said there would be no 2009 bonuses at banks that have received state aid.

The debate echos public outrage in the United States, where the House of Representatives reacted to anger over bonuses paid by bailed-out banks, voting last week to sharply restrict how Wall Street pays its executives and workers.

At the G20 summit in April, world leaders agreed that banks should ensure that their "compensation structures are consistent with firms' long-term goals and prudent risk taking." Payments should not be made over short periods where risks are realized over long periods, they said.

In the statement, Sarkozy's office said that "France is determined to make the respect of these rules by all global financial centers one of the challenges of the G20 in Pittsburgh next September."

At BNP Paribas, spokesman Pascal Henisse said the bank won't give an exact figure for the bonuses, but did not deny the Liberation report. He said that bonuses will depend on the bank's performance over the rest of the year and payments will be in full compliance with French and international regulations.

BNP Paribas said Tuesday its net profit rose 6.6 percent in the second quarter on investment banking revenue which nearly tripled, forcing BNP Paribas to provision for bankers' bonuses.

Societe Generale spokeswoman Astrid Brunini said decisions over bonuses will be made at the end of the year.