Money News

German minister still hopeful for G20 deal - paper

BERLIN (Reuters) - World leaders might still be able to agree on tougher rules for bankers’ bonuses and lenders’ capital requirements at this week’s G20 summit, Germany’s Finance Minister was quoted as saying on Sunday.

German Finance Minister Peer Steinbrueck of the Social Democratic Party (SPD) arrives for the last cabinet meeting before the upcoming general election at the Chancellery in Berlin, September 16, 2009. REUTERS/Thomas Peter

“I think there’s interest in reaching a deal on both sides of the Atlantic when it comes to tightening bank bonuses and raising capital requirements for banks,” Finance Minister Peer Steinbrueck told German business daily Handelsblatt.

In a separate interview with daily Sueddeutsche Zeitung, Steinbrueck said he supported a Dutch proposal to limit banking executives’ bonuses at the level of their fixed annual salary.

“But it’s up to the G20 summit to agree on the balance between fixed and variable compensation,” he said.

German Chancellor Angela Merkel, who is seeking re-election in a week’s time, said on Saturday she was “thoroughly optimistic” that a deal could be struck on reforming financial markets at the summit in the U.S. city of Pittsburgh.

However, she said success could not be taken for granted and reiterated that the Sept. 24-25 G20 meeting must mark a step forward from a previous G20 summit hosted by Britain in April.

“We need to get well beyond the agreements made in London,” she said. “We can work towards ensuring a (financial) crisis like this is not repeated worldwide. That must be our goal.”

Steinbrueck, a member of the centre-left Social Democrats (SPD), who share power with Merkel’s conservatives, is hoping to press for the introduction of a global tax on financial transactions in Pittsburgh.

However, an advance communique for the summit sent out by U.S. officials made no mention of this plan, a sign it was unlikely to be on the agenda, German magazine Der Spiegel said.

Steinbrueck told Handelsblatt the transaction tax was now “on the agenda of more and more people in positions of political responsibility” and that his first priority was to raise awareness here before seeking agreement on how to apply it.

“Those who caused the crisis should foot the bill,” he said.

The government has said the economy will contract by around 5 to 6 percent this year -- easily its worst performance since World War Two -- and Steinbrueck has stressed that restoring the financial sector to health was crucial to a recovery.

Germany passed a “bad bank” law this summer designed to allow its lenders to offload problem assets. But few banks have so far made use of it, prompting calls from some leading economists to force them to accept state aid.

Steinbrueck has identified the country’s publicly-owned Landesbanks as one of the main risks to financial stability in Germany and he told the Sueddeutsche Zeitung some of them would look to use the legislation after the Sept. 27 federal vote.

“Some are in the north, some are in the south,” he said, when asked if this meant HSH-Nordbank, a Landesbank from northern Germany, and the Bavaria-based BayernLB.

Reporting by Dave Graham; Editing by Greg Mahlich