'Party over' for bankers

London - Britain's finance minister Alistair Darling voiced confidence on Thursday that a G20 summit would strike a deal to clamp down on bonuses, insisting that "the party" must end for bankers.

The leaders of the world's biggest economies gathered in Pittsburgh Thursday promising tough action to police financial markets and prevent a repeat of last year's crash, partly blamed on excessive risk taking in pursuit of bonuses.

Last week, France and Germany upped calls for caps on banker bonuses amid opposition from Britain and the United States, but a watered-down compromise now appears likely to be reached, officials said ahead of the summit.

Chancellor of the Exchequer Darling told the BBC: "At the moment most banks in the world need to build up their capital, build up the buffers for the future.

"So they shouldn't be paying money out in dividends and in large bonuses at a time when they should be rebuilding their own strength.

"I also think... there will be an agreement (at the summit) which will be very much on the lines of some of the proposals we've made where you don't reward failure; where if you do pay a bonus then it's held onto... for three years until we actually see whether the performance justified it and if it didn't, (then) it can get clawed back," Darling said.

He said bonuses should also be linked to the financial strength of a company.

"But the key thing I think is to just get across to bankers that for them the party has got to be over."

The two-day Pittsburgh meeting of the world's 19 biggest developed and emerging economies plus the European Union comes just over a year after a US credit market collapse unleashed global economic chaos.

What's the origins of this crisis?" Darling said in the BBC interview.

It's frankly that banks started buying and selling products they didn't understand. It's hardly surprising then that there's this almighty car crash. "The tragedy is that is wasn't them that suffered, it was everybody else because the world economy then plunged into a recession."

Darling said "the key (thing)... is to move from saying 'we know what the problem is, we know what the difficulties are.'

"Let's change the rules and let's make sure that (every regulator) gets into these banks and says 'you've got to stop these practices.' And we make sure that you do."

- AFP