G20 urges fat cat pay crackdown

Published on Saturday 5 September 2009 19:54

A GLOBAL crackdown on bankers' pay was demanded by the world's top 20 industrial countries yesterday.

But finance ministers stopped short of a cap on salaries and bonuses at their G20 summit, saying banks themselves must act to stop massive payouts that "reward failure".

The G20 gathering in London also pledged to continue high-spending measures to boost the global economy, warning the fledging recovery was by no means assured.

Chancellor Alistair Darling had dismissed French proposals for a cap on individual bankers' bonuses as "unenforceable", but said the compromise reached should do away with pay structures which gave bankers an incentive to take excessive risks.

Darling said: "I hope we are going to enter an era where we don't have again a situation where people are being rewarded for reckless behaviour that could endanger the health of the bank they work for and the country in which they operate.

"What there was unanimity about on the part of both ministers and central bankers ... is that every single banker has to realise – whether or not they received direct state aid last year – that they wouldn't be here if it were not for the efforts made by the countries, underwritten by the taxpayer. They therefore have an obligation to make sure their pay practices are responsible and fair."

Earlier, Prime Minister Gordon Brown had said: "Pay and bonuses cannot reward failure or encourage unacceptable risk-taking. It is offensive to the general public, whose taxpayers' money in different ways has helped stop many banks from collapsing and is now underpinning their recovery."

But International Monetary Fund chief Dominique Strauss-Kahn said more could have been done to limit bankers pay, saying: "There is broad agreement on what to do. The problem is we need to go beyond agreement. We need to have concrete measures."

After taking stock of the economic situation ahead of this month's summit of G20 leaders in Pittsburgh, the finance ministers agreed to continue expansionary monetary and fiscal policies to support their economies until recovery is secured. They said they would develop co-ordinated "exit strategies" to deal with public deficits once the recession is over.