Reinfeldt supported calls from Sweden’s finance minister Anders Borg on Thursday calling for an end to the bumper bonus culture. Borg has argued that “the banks were partying like it was 1999, but it is actually 2009. The bonus culture must come to an end and it must come to an end in Pittsburgh.”
France and Germany have already expressed a wish for the EU to agree on a common position on financial sector bonus and pay issues ahead of the G20 summit, to be held in Pittsburgh at the end of September.
Britain has also talked about curbing excessive bonuses but the devil remains in the details, with London not happy with the French idea of introducing caps on bonuses, with an eye on the city’s massive financial sector.
On Friday, seven European finance ministers, including Sweden, also called for strict rules governing bankers’ bonuses, arguing that in some instances the payment of such compensation has been “improper, cynical and unacceptable.”
The ministers, in a hard-hitting letter published in newspapers in all seven countries, appealed to their colleagues in the Group of 20 to back their demand that “a strict compensation policy be put in place.”
The ministers, representing Sweden, the Netherlands, Luxembourg, France, Spain, Germany and Italy, said guaranteed bonuses for more than one year should be banned.
Exorbitant banker bonuses were also on the agenda for finance chiefs from the 20 leading developed and developing countries, meeting in London to discuss steps to sustain a nascent recovery in the world economy.
Some banks rescued by crisis-related public assistance are continuing to distribute fat bonuses, a practice that has sparked outrage in Europe and elsewhere.
Reinfeldt said that the EU summit would be “looking at suggestions close to what (French) President Sarkozy has proposed on bonus limits.”
He underlined: “Banks would have gone bankrupt without taxpayers’ money and to say now ‘it’s business as usual’, to go back to bonuses, is not correct.”
Bankers “will see a growing reaction from the citizens. It’s important to send a signal ‘don’t get back to the situation where it started’,” he stressed.