Saturday, November 21, 2009 Previous editions
France issued new rules to banks today regulating how they award bonuses in an attempt to stamp out risky practices and short-term thinking.
The measures, hammered out amid the debate on bonuses that stemmed from the international financial crisis, were published in the government’s Journal Officiel, formally putting them into force.
They will force banks to spread out compensation over several years, reflecting long-term profits and cutting down on risky decision-making. At least half of the bonus will be withheld, to be paid over three years depending on performance.
Half of bonuses must come in the form of stocks. Also, French banks cannot guarantee future bonuses more than a year in advance, Finance Minister Christine Lagarde said.
French President Nicolas Sarkozy has led a global push for tighter international regulations and limits on bankers’ pay.
France injected €25bn into the country’s six banks to keep them lending during the crisis.
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