G20: French Fin Min: Got Reassurance From US On Bonuses

ST ANDREWS (Scotland)--French Finance Minister Christine Lagarde said she has obtained reassurances from her U.S. counterpart, Treasury Secretary Timothy Geithner, that the U.S. will abide by rules recently set out by the Financial Stability Forum on bank bonuses as soon as early 2010.

"My U.S. colleague has assured me that the U.S. will be compliant with FSB rules for the next bonus season," Lagarde told reporters after a gathering of finance ministers from the Group of 20 leading economies in Scotland Saturday.

Compensation in the banking sector has been a contentious issue between France and the U.S. going into the G20 meeting in St. Andrews.

France has recently enacted strict regulations framing bankers' pay along FSB guidelines agreed at the last G20 meeting of heads of state in Pittsburgh, which will be applied to bonuses to be paid for the year 2009 at the start of next year.

The French finance minister had voiced concern about the implementation of such rules in the U.S., fearing the Federal Reserve might take a more relaxed approach to FSB guidelines, distorting competition.

In an apparent victory for France, the G20 finance ministers' gathering Saturday called for an immediate implementation at a national level of the FSB guidelines on compensation in the banking sector, and it tasked the FSB to report back on implementation of these rules.

-By Nathalie Boschat, Dow Jones Newswires; nathalie.boschat@dowjones.com

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November 07, 2009 12:33 ET (17:33 GMT)


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