French government says wants top bankers to explain pay rises
PARIS, April 17
PARIS, April 17 (Reuters) - The French government will call a meeting with the country's top bankers over 2013 compensation rises awarded to their chief executives, Economy Minister Arnaud Montebourg said on Thursday.
He said earnings for the CEO at Credit Agricole, France's third-biggest listed bank, rose 38 percent while they were up 29 percent for the head of BPCE, the second-largest retail bank, and 14 percent for the chief of Natixis, BPCE's investment arm.
"We need to discuss this with the banking community. We can't have a banking system that doesn't do its job and have compensation and profits surging in proportions that are, in our view, inconsistent," Montebourg said.
He said Socialist Prime Minister Manuel Valls planned a meeting with banks to discuss the matter in the context of small and mid-sized companies (SMEs) struggling to finance their investments. No date for the meeting was given.
From next year, banker bonuses in the 28-country European Union can be no higher than their salaries or twice that amount if a bank's shareholders give their approval.
Credit Agricole said in its annual report that it had awarded its chief executive a 19 percent increase in his bonus to 1.07 million euros ($1.47 million) for 2013 after the lender's profits recovered, while gross compensation was up 38 percent to 2.1 million euros.
The recently reshuffled French government is struggling to revive economic growth with unemployment stuck above 10 percent.
French SMEs employ 64 percent of workers in the non-farm private sector and generate 59 percent of income, roughly close to EU averages, according to 2012 data from Eurostat.
While large companies can count on tapping markets to get cheaper longer-term funding, smaller firms rely largely on funding from banks, where rates charged on medium-term loans have been running at about 2.8 percent, according to the Bank of France.
Montebourg said that historically 75 percent of funding for SMEs was executed by banks and 25 percent by the markets but the ratio had since largely reversed with 35 percent coming from banks and 65 percent from markets. (Reporting by Maya Nikolaeva, Matthias Blamont and Leigh Thomas; Editing by Mark Heinrich)
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