* French economy minister pledges to limit bonuses
* To meet top French bank executives next Monday
* UK minister says ready to tighten bank pay laws
* U.S. 'pay czar' says can claw back payouts
(Adds background, recasts)
By James Mackenzie
PARIS, Aug 17 France pledged to limit guaranteed
bonus payments to bankers on Monday as a backlash against
seven-figure pay packages in the industry builds on both sides
of the Atlantic.
French Economy Minister Christine Lagarde said she would act
against policies that encourage excessive risk-taking after
Britain said it was prepared to take a tougher stance and a U.S.
"pay czar" steps up his scrutiny on pay deals.
A public and political backlash against bonuses has flared
across Europe after anecdotal evidence that banks are paying out
millions of dollars to lure and retain top staff.
Britain's Barclays (BARC.L) is attempting to recruit five JP
Morgan (JPM.N) investment bankers with a bonus package worth up
to 30 million pounds ($49.2 million), according to media
reports, and other banks are offering lucrative deals to woo
French President Nicolas Sarkozy will next week discuss pay
in meetings with finance heads, following an outcry earlier this
month after reports that BNP Paribas (BNPP.PA) had set aside 1
billion euros ($1.4 billion) for possible bonus payments.
Authorities in Europe and the United States are stepping up
moves to rein in attempts by financial institutions, including
recipients of state bailouts, to return to the bonus culture
that was blamed for the excessive risk-taking that underpinned
last year's market crisis.
Lagarde told France Inter radio on Monday: "We must
absolutely go further and put an end to these excesses and these
abuses which public opinion will not put up with and which also
provide an incentive to risk-taking."
The heads of some of France's largest banks are due to meet
Lagarde and economy ministry officials on Monday next week ahead
of a second meeting with Sarkozy on the following day.
The UK government said it is prepared to tighten the laws on
bankers' pay and bonuses if companies continue to reward
excessive risk-taking. [ID:nLF158735]
"If we need to change the law and toughen things up, we can
do that," finance minister Alistair Darling told the Sunday
Times at the weekend. [ID:nLF158735]
Last week a U.S. judge refused to approve a proposed
settlement between regulators and Bank of America Corp (BAC.N)
over bonus payments to Merrill Lynch employees, saying it lacked
transparency and he could not determine if it was fair to the
Lagarde said the principle of guaranteed bonus payments was
"unacceptable", and joined calls for countries to work together
for a coordinated response.
Banks can offer guaranteed bonuses, sometimes stretching for
a number of years, to woo star performers who stand to lose
payments already agreed with their previous employers.
Britain's financial regulator last week set out new
guidelines on pay and banned guaranteed bonuses of over a year.
But it was slammed by politicians for not going far enough to
prevent a repeat of pay policies that helped cause the recent
The Group of 20 (G20) leading world economies agreed in
April on a broad set of principles on bankers pay, saying it
expected "material progress" by the 2009 bonus round. Progress
will be reviewed at a summit next month in Pittsburgh.
Several finance chiefs have warned against an overreaction
by politicians to the issue, however.
"The populist assault on bonuses has already produced some
bizarre results, such as some banks increasing basic salaries in
expectation of not being able to pay bonuses," said Terry Smith,
chief executive of interdealer broker Tullett Prebon TLPR.L.
"This unintended consequence of the bonus assault is
The building pressure in Europe came as a U.S. compensation
chief prepares to step up his scrutiny of top paid staff at
seven big U.S. companies helped by taxpayer cash.
Kenneth Feinberg told Reuters on Sunday he has broad and
"binding" authority over executive compensation, including the
ability to "claw back" money already paid, and he is weighing
how and whether to use that power.
He has been consulting with companies that have yet to pay
back money they borrowed from the government, including
Citigroup (C.N) and Bank of America (BAC.N). The companies had
until Friday to submit details about the pay of their top 25
(Additional reporting by Steve Slater in London and Steve
Eder in Martha's Vineyard, Massachusetts; editing by John