France seeks curbs on bankers' bonuses

French President Nicolas Sarkozy was meeting Tuesday with banking chiefs as he sought to curb the risk-taking bonus culture that fueled the global financial crisis.

The hot-button issue of bonuses, for years debated among French leftists, was rekindled three weeks ago by reports that BNP Paribas SA has set aside around euro1 billion ($1.43 billion) for bonuses in its investment banking division.

The government injected euro5.1 billion into France's largest bank to keep it lending during the crisis. French banks Societe Generale, Credit Agricole and the parent company of Natixis were also helped by the government's euro22 billion scheme.

French government spokesman Luc Chatel said Tuesday that banks "mustn't act as if nothing has happened," adding that the crisis has shown the banks must change the way they operate and become more transparent.

Sarkozy has argued since the crash for a stricter regulation of financial markets, and he wants world leaders to agree on global guidelines on bonuses at the G-20 summit of leading nations in Pittsburgh in September.

In an interview Tuesday with France-2 television, Chatel called on banks that received government help to grant loans to small businesses and individuals.

The debate echoes public outrage in the United States, where banks have been criticized for paying out big bonuses while accepting taxpayer money.

Citigroup, which is now one-third owned by the U.S. government as a result of the bailout, gave 738 of its employees bonuses of at least $1 million even after it lost $18.7 billion during the year.

In contrast, the outcry over 2009 bonus payments at BNP Paribas, which was profitable last year, came as it announced a net profit of euro1.6 billion ($2.3 billion) in the second quarter. The reported funds set aside for bonuses is about euro59,000 ($85,000) per employee, although payments will depend on the bank's performance over the rest of the year.

Jean-Claude Mailly, head of the Force Ouvriere workers union, called Tuesday for stricter rules over bonuses, according to the Le Figaro newspaper.

Meanwhile, Paris Europlace, an organization that promotes Paris as a financial center, sought to ensure France remains competitive.

"It is essential that the new measures which may be applied to French banks are also applicable simultaneously at the international level, otherwise Paris risks loosing competitiveness and seeing activities and jobs shift to competing financial centers," said Gerard Mestrallet, the GDF Suez CEO who is also president of Paris Europlace.

At the G-20 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."