London - Clear differences on how to tackle bankers' bonuses remain after G20 finance ministers meeting in London on Saturday agreed to take action without meeting European calls for mandatory caps.
By proposing "global standards on pay structure", the ministers reached a compromise which allowed both Europe and the United States to claim victory.
The Group of 20 largest and fastest-emerging economies said they wanted to shift the emphasis from rewarding short-term success which encouraged risky behaviour to paying bankers for long-term performance.
They said bankers' pay must be "aligned with long-term value creation and financial stability".
"This will prevent excessive short-term risk taking and mitigate systemic risk," their end-of-meeting communique added.
French Finance Minister Christine Lagarde arrived in London protesting loudly that her country wanted international mandatory caps on bonuses, in a proposal backed by fellow European powerhouse Germany.
But Britain, Canada and the United States opposed the idea, succeeding in persuading their G20 colleagues to agree to ask the Financial Stability Board, a guideline-setting international watchdog, to examine the issue.
When the dust settled, Lagarde said she was happy with a compromise that kept the issue firmly on the agenda for a summit of G20 leaders in the US city of Pittsburgh on September 24-25.
"Excessive bonuses are in everyone's sights," she said after the meeting. "France's proposals have been taken into account by all our partners and the proposal to limit bonuses is also taken into consideration.
"It would have been hard to imagine this just a few weeks ago."
US Treasury Secretary Tim Geithner saw the outcome rather differently.
He said the United States welcomed the "support we found here in Europe" for compensation reform - and he said Washington was the first to set out proposals to tackle the issue, in February.
Asked later about French calls for caps, Geithner pointed out that no G20 member state was asking for a specific amount at which they should be pegged.
"I don't believe any country is actually proposing to set limits globally," he told a news conference.
"What there is though is a broad recognition that changing compensation practices fundamentally will be fundamental to future reform and we're going to move forward and do that."
British finance minister Alistair Darling, the meeting's host, said despite any differences, clear progress had been made in recognising the danger posed by excessive pay packages.
He said there was a shared determination "to stop banks or other financial institutions getting themselves into a situation where their pay-and-reward practices actually encourage people to take risks".
Such practices "bring their institutions into a situation where they could be brought down with catastrophic results", he told journalists.
- AFP