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Bonus row opens up G20 divisions Bonus row opens up G20 divisions
(about 2 hours later)
Deepening divisions are appearing among international finance ministers, meeting in London, about how to curb excessive bank bonuses.Deepening divisions are appearing among international finance ministers, meeting in London, about how to curb excessive bank bonuses.
French Finance Minister Christine Lagarde has promised to launch an "onslaught" against large payouts.French Finance Minister Christine Lagarde has promised to launch an "onslaught" against large payouts.
The UK has dismissed the idea, while other countries remain concerned about how best to recover from the recession.The UK has dismissed the idea, while other countries remain concerned about how best to recover from the recession.
The issues are set to dominate a meeting of the G20 group of leading developed and emerging economies.The issues are set to dominate a meeting of the G20 group of leading developed and emerging economies.
At their meeting - a preparatory session for the next full G20 summit - the G20 finance ministers will consider whether recent signs of economic improvement should be followed by a reverse of some of the emergency measures implemented to stimulate the global economy.At their meeting - a preparatory session for the next full G20 summit - the G20 finance ministers will consider whether recent signs of economic improvement should be followed by a reverse of some of the emergency measures implemented to stimulate the global economy.
France, Germany and Japan have all shown positive growth in recent months.France, Germany and Japan have all shown positive growth in recent months.
Cap 'unworkable'Cap 'unworkable'
Outlining her opposition to the bonus culture, Mrs Lagarde told the BBC that bonuses had contributed to the global financial crisis and needed to be capped to avoid problems happening again.Outlining her opposition to the bonus culture, Mrs Lagarde told the BBC that bonuses had contributed to the global financial crisis and needed to be capped to avoid problems happening again.
Lagarde said the world was still suffering from events a year agoLagarde said the world was still suffering from events a year ago
"What happened 12 months ago was just horrible for our societies, it was horrible for our economies, and we are still suffering as a result," she said."What happened 12 months ago was just horrible for our societies, it was horrible for our economies, and we are still suffering as a result," she said.
France is proposing a series of mandatory caps on bonuses - which the head of the Eurogroup of eurozone finance ministers, Luxembourg's Jean-Claude Juncker, said he "totally supported".France is proposing a series of mandatory caps on bonuses - which the head of the Eurogroup of eurozone finance ministers, Luxembourg's Jean-Claude Juncker, said he "totally supported".
But Britain's Chancellor Alistair Darling has described the idea of a cap as "unworkable", instead favouring rules linking bankers' pay to long-term performance.But Britain's Chancellor Alistair Darling has described the idea of a cap as "unworkable", instead favouring rules linking bankers' pay to long-term performance.
Disagreement has also emerged on the issue of when economies should begin thinking about recovering from the events of the past 12 months. The BBC understands that Chancellor Alastair Darling will propose that bonus payments be paid out over five years and only in the form of stock options.
Swedish Finance Minister Anders Borg described the world as "standing in the ashes" of the credit crunch. The plan envisages that the bulk of the bonus be paid in the final two years of that five year period and includes claw-back clauses.
"When you've just come out of the ashes, it's not time to call off the fire department," AFP news agency quoted him as saying. The suggestion by Mr Darling goes some way to meet the concerns of many other EU governments who had suggested an outright cap on bonuses, says the BBC's Joe Lynham.
"I think it's very reasonable that during 2010, we will keep both monetary and fiscal policy expansionary, but having said that, it is also very, very important that we start to talk and plan our exit strategies."
Emerging economies warnEmerging economies warn
Holding a mini-summit away from the G20 meeting, ministers from emerging economies Brazil, Russia, India and China (Bric) called for caution, warning it was "too early" to talk of an end to the crisis.Holding a mini-summit away from the G20 meeting, ministers from emerging economies Brazil, Russia, India and China (Bric) called for caution, warning it was "too early" to talk of an end to the crisis.
The global economy still faces great uncertainty, and significant risks remain to economic and financial stability Bric statement Finance ministers face tough talks G20: Economic summit snapshotThe global economy still faces great uncertainty, and significant risks remain to economic and financial stability Bric statement Finance ministers face tough talks G20: Economic summit snapshot
The huge cash injections pumped into businesses by governments around the world could not be withdrawn in a hurry without causing new problems, they said.The huge cash injections pumped into businesses by governments around the world could not be withdrawn in a hurry without causing new problems, they said.
Brazilian Finance Minister Guido Mantega added that "the exit should be gradual" as withdrawing state aid to economies too quickly "would not send a good signal to the markets".Brazilian Finance Minister Guido Mantega added that "the exit should be gradual" as withdrawing state aid to economies too quickly "would not send a good signal to the markets".
"The global economy still faces great uncertainty, and significant risks remain to economic and financial stability," the four countries, known as the Bric quartet, said after their mini-summit."The global economy still faces great uncertainty, and significant risks remain to economic and financial stability," the four countries, known as the Bric quartet, said after their mini-summit.
Of European nations, Germany wants the G20 countries to start discussing when and how to withdraw stimulus measures, but fellow European Union members have been reluctant.Of European nations, Germany wants the G20 countries to start discussing when and how to withdraw stimulus measures, but fellow European Union members have been reluctant.
Ms Lagarde said the timing of any withdrawal was something that "God only knows".Ms Lagarde said the timing of any withdrawal was something that "God only knows".
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