Failed bank chiefs to face sanctions: Sarkozy Agence France-Presse

Published: Saturday October 4, 2008





Print This Email This PARIS (AFP) - The leaders of Britain, France, Germany and Italy vowed at an emergency summit Saturday to help European banks and financial institutions in trouble but also to sanction the heads of failed banks, President Nicolas Sarkozy said.



The quartet also issued a joint call for a Group of Eight industrial powers summit "as soon as possible" to review rules governing financial markets, Sarkozy told a press conference.



Sarkozy said the four countries would intervene to help commercial institutions in trouble, but there would be no bailout fund and authorities would penalise executives and shareholders under the terms of rescue packages.



"We have agreed to make a solemn engagement as heads of state and government to support banking and financial institutions faced with the crisis," he said.



"In the case of a public support to a bank in distress, each member state present here has decided that those executives who failed will be sanctioned and the shareholders bear the weight of the intervention," Sarkozy said.



Sarkozy said that bonus structures for top executives should be "revisted in order to avoid incentivising the taking of excessive risk and to fight against what we can call 'short-termism'."



And they agreed to show flexibility when applying strict European state aid rules -- as has been the case in Britain, where Brown's government waived through a proposed merger deal between Lloyds-TSB and HBOS.



He called for a "task force uniting regulators, central banks and ministers" to take charge of monitoring the coordinated response.



The group met to seek a coordinated response to the credit crunch, which has drained liquidity from banks and stock markets and undermined flagging growth rates.



German Chancellor Angela Merkel spelled out that European states must "take their responsibilities at a national level" for the banking crisis, while being careful not to harm other European states.



Jean-Claude Juncker, Luxembourg premier and eurozone group head, said Saturday after a mini-summit of European economic powers that the stability pact laying down regulations for economies which use the euro must be "respected" despite the international financial crisis.



