Aug 26 (Reuters) - Germany and France want G20 nations to reach an agreement on tougher rules governing bonus payments in the financial sector, German Finance Minister Peer Steinbrueck said in an interview published on Wednesday.
French President Nicolas Sarkozy announced new limits on bonus payments to bank traders on Tuesday and said he would press partners in the Group of 20 nations to adopt the same standards as Paris.
G20 finance ministers meet on Sept 4-5 in London to discuss bankers' pay as part of a review of progress on pledges to toughen up regulation.
Following are key developments in remuneration policy:
FRANCE -- French President Nicolas Sarkozy announced new limits on bonus payments to bank traders on Tuesday. He said banks would henceforth be required to defer two thirds of bonuses paid to traders over three years and make a third of the payout in bank stock. If an operation on which a bonus was paid lost money in the two years afterwards, the deferred part of the bonus would not be paid out. -- Sarkozy said the head of BNP Paribas had agreed to apply the new rules as of Tuesday. The debate was only rekindled when it emerged that BNP Paribas, had set aside 1 billion euros ($1.43 billion) for possible bonuses after reporting a 6.6 percent rise in Q2.
-- French banks had adopted a code of conduct in February based on general guidelines provided by the G20 which was aimed at ending huge guaranteed bonus payments.
G20 -- Leaders have endorsed principles from the Financial Stability Board, comprising central bank, regulatory and finance ministry officials from each of the G20 countries, to ensure "compensation structures are consistent with firms' long-term goals and prudent risk-taking".
-- Leaders agreed there should be "significant progress" in applying these principles nationally by the 2009 bonus round. Supervisors should intervene in pay policies, if necessary, with measures that can include higher bank capital requirements.
EUROPEAN UNION -- The European Commission proposed a draft law in the 27-nation European Union in July that gives national supervisors powers to fine or require banks to hold higher capital if pay policies encourage overly risky behaviour.
-- Bonuses must not be a disproportionately large part of overall pay or purely focused on an individual but must take into account the performance of the business unit and company.
-- It requires approval from the European Parliament and EU states to take effect in 2011. It aims to apply a set of Commission guidelines on remuneration for member states.
GERMANY -- Market supervisor Bafin unveiled new rules this month that will force bankers to repay their bonuses if they take unjustifiable risks.
-- Bonuses will be tied to the success of the organisation as a whole and banks have until the end of 2009 to apply the rules.
-- Chancellor Angela Merkel has called for an international ban on bonus payments to bankers if their business year was bad.
-- Germany's 500 billion euro bank rescue package included a clause saying salaries above 500,000 euros per year are considered inappropriate for managers in banks using the fund.
BRITAIN -- The Financial Services Authority this month banned guaranteed bankers' bonuses of more than one year, saying it was leading a global crackdown on excessive risk-taking. The code will affect 26 major banks operating in Britain.
-- The FSA said it would review the rules if other countries failed to follow suit, thus putting Britain at a competitive disadvantage.
-- Fury erupted in Britain over news that Royal Bank of Scotland, which needed a government rescue, was paying an annual pension of 703,000 pounds ($1 million) to its former chief executive Fred Goodwin. Months later, after a campaign that included windows of his Edinburgh home being smashed, Goodwin agreed to reduce his pension, to 342,500 pounds annually.
UNITED STATES -- U.S. House of Representatives has approved a bill that would require separate shareholder votes on golden parachutes and empower regulators to ban pay structures that encourage inappropriate risks. It is not clear whether the Senate will approve the bill.
-- Passage of the bill came a day after a report that more than 4,700 bankers and traders got 2008 bonus payments of $1 million or more at large banks bailed out by taxpayers.
-- Congress in February restricted bonuses and other forms of pay for top managers at banks and companies that got help under the government's $700-billion financial industry bailout. The Obama Administration has appointed a "pay tsar", Kenneth Feinberg, who has authority to claw back money already paid.
IRELAND -- Ireland unveiled a beefed-up rescue programme for its two main lenders on Feb. 11. As part of the package, total remuneration for all senior executives would be reduced by at least 33 percent. No performance bonuses would be paid for these executives and no salary increases would be made in relation to 2008 and 2009. (Writing by Huw Jones, David Cutler and Jijo Jacob; editing by Stephen Nisbet)