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WRAPUP 3-Banker bonuses, Greece in focus at EU summit

Published 12/10/2009, 06:57 PM

* Brown, Sarkozy united on taxing banker bonuses heavily

* Germany urges solidarity with Greece over debt problem

* No deal on climate change financing (Updates after news conference)

By Timothy Heritage and Jan Strupczewski

BRUSSELS, Dec 10 (Reuters) - Britain and France joined forces at a European Union summit on Thursday to demand that bankers' bonuses be taxed heavily and Germany called for solidarity with Greece over a mounting debt problem.

A British spokesman said Prime Minister Gordon Brown and French President Nicolas Sarkozy had agreed on the need to tax big bonuses substantially following the economic crisis at a 30-minute meeting on the sidelines of the summit in Brussels.

The talks eased tension over the appointment of former French Foreign Minister Michel Barnier to help oversee a banking shake-up, which alarmed Britons who fear Paris will seek tougher regulation of London, Europe's main financial centre.

"They are both completely aligned on the importance of that sort of (tax) scheme to ensure that going forward we don't repeat the same mistakes of the past and move towards an era of more responsible banking," spokesman Simon Lewis said.

But there was no indication other EU governments would rush to back such moves, and the leaders did not agree how much money to offer developing countries to tackle global warming in the three years before any deal agreed at international talks in Copenhagen takes effect.

Swedish Prime Minister Fredrik Reinfeldt said the leaders would return to the climate change discussions on Friday, the second and last day of the summit.

"We think we'll have a better figure tomorrow than we have tonight," he told a news conference.

One EU source said member states had pledged a total of 1.8 billion euros ($2.65 billion) annually to help the developing countries during the three-year period, and another said that total was likely to reach up to 2.1 billion annually.

STATE OF THE ECONOMY

The summit had been expected to focus on efforts to tackle global warming, but diplomats said the leaders spent much of the time talking about the economy.

Many voters blame bankers for the economic crisis and are angry they could now receive huge bonuses, even though some of their banks were bailed out with taxpayers' money.

The British government said on Wednesday banks operating in Britain would be charged a 50 percent tax rate on employees' bonuses of above 25,000 pounds ($40,610) and France is considering similar plans.

Brown and Sarkozy called in a newspaper article for an exceptional tax on global bank bonuses, and German Chancellor Angela Merkel described a one-off tax on such bonuses as an attractive idea.

But there was no immediate indication that any other countries had supported the French and British calls.

EU diplomats said the leaders also discussed Greece, whose debt and stock prices have taken a beating since a downgrade by credit rating agency Fitch this week because of the country's large budget deficit and public debt.

The chairman of the group of countries that use the euro said Greece would not go bankrupt and would need no help from EU states. Merkel said, however, that the euro zone countries had a shared responsibility for the future of Greece, which is among the countries that use the euro.

"What happens in one member state affects all others, especially as we have a common currency, which means we have a common responsibility," she said in Bonn before the summit.

PRESSURE ON GREECE

The EU is trying to put pressure on Athens to launch tough reforms without alarming financial markets that it could be left to its own devices.

"These comments hint that other euro zone member states will not let Greece fall down, while also suggesting that they will be very tough on the Greek government to make sure that it takes the necessary steps to stand on its own feet," said Nick Kounis, economist at Fortis bank.

Jose Manuel Barroso, the head of the executive European Commission, said after talks with Greek Prime Minister George Papandreou that he believed Athens could overcome its problems.

The EU, which represents nearly 500 million people, will want to act quickly to stop any suggestion that Greece could cause a wider crisis. The bloc has drawn criticism for being too slow to act as the global economic crisis struck last year. (Additional reporting by Luke Baker and by Sarah Marsh in Bonn; Editing by Charles Dick)

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