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PARIS -(Dow Jones)- France is concerned that the implementation of rules aimed at limiting compensation in the financial sector isn't going fast enough, an official from the finance ministry told reporters Wednesday, ahead of the meeting of finance ministers of the group of 20 leading industrial and emerging nations later this week.
France is also worried that some countries may want to stick to general guidelines rather than enforcing strict rules with set objectives.
"We will be vigilant on financial regulation, especially on compensation" in the banking sector, the finance ministry official said. He added France intends to step up the pressure on its G-20 partners to make sure principles on pay in the financial sector agreed on at the gathering of G20 heads of state in Pittsburgh at the end of September are actually applied.
The G-20 finance ministers are due to meet in St Andrews, Scotland, on Nov. 6 and 7.
Remuneration in the banking sector remains a vexing question for governments, which are worried banks could return to what they see as excessive bonus practices on the back of strong profits in the third quarter, due to buoyant financial markets and a pick-up in investment banking activity.
Some G-20 governments, chief among them France, are anxious to see strict rules framing banking remuneration put in place before bonuses are paid out in February or March next year.
At their meeting in Pittsburgh, G-20 heads of state endorsed principles on compensation in banks defined by the Financial Stability Forum, a group of international banking and market regulators.
The FSB set out precise indications on the proportion of bonuses to be deferred over several years and paid in shares, as well as on the possibility for banks to claim back part of bonuses paid to employees in case of poor results, known as clawback clauses, and the ban of guaranteed bonuses beyond one year.
So far only a limited number of countries, such as France, the U.K and Italy, have devised precise guidelines with set targets on banking pay. The U.S. has recently launched a consultation on ways to establish guidelines on pay in the financial sector, which for now falls short of setting out definite objectives banks should comply with.
This has fueled growing concern on the part of French officials that some G-20 countries might consider a more relaxed oversight on whether banking pay is likely to encourage excessive risk-taking as sufficient, rather than holding banks accountable to precise rules.
The French finance ministry official added the G-20 gathering will also discuss ways of enhancing the coordination of macroeconomic policies to avoid the build up of global imbalances, known as the framework for sustainable growth.
On the economic outlook, the official said that although there is general agreement that the situation has improved, the G-20 is unlikely to call for the reversal of stimulus measures yet.
-By Nathalie Boschat, Dow Jones Newswires; +33 1 40171740; nathalie.boschat@dowjones.com;
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November 04, 2009 07:26 ET (12:26 GMT)