French bank Credit Agricole under fire over bonuses

26th March 2009, Comments 0 comments

Credit Agricole, which received state aid in December, is handing out EUR 51 million in bonuses while laying off 31 employees.

PARIS – French bank Credit Agricole came under fire Wednesday over plans to pay bonuses to senior staff while laying off 31 employees at the bailed-out group.

One of France's leading banks, Credit Agricole received EUR 3 billion in state aid in December to help it weather the global financial crisis.

The uproar came one day after President Nicolas Sarkozy made clear that banks that have received state funds should not pay bonuses, hand out stock options or roll out golden parachutes to executives while firing staff.

After the Liberation newspaper reported that Credit Agricole's Cheuvreux brokerage firm was handing out EUR 51 million in bonuses, the bank issued a statement confirming that some payments would be made.

But it said the bonuses were for 2008 "when Cheuvreux posted satisfactory results during a difficult year-end".

The worsening crisis has forced Cheuvreux to downsize and 31 employees will lose their jobs in France, the statement added.

Facing public outrage over big payoffs, the government has given business groups until 31 March to come up with proposals to cap salaries and bonuses for executives, Sarkozy's top aide Henri Guaino said earlier.

"This is not an invitation for proposals, it is an ultimatum," Guaino told France Inter radio.

The government on Tuesday vowed to oppose a golden parachute severance payment for the departing boss of troubled auto parts supplier Valeo.

Valeo chairman and chief executive Thierry Morin, whose departure was announced Monday, is to get a EUR 3.2 million payment even though the firm has sunk deep into the red.

Receiving a large pay-off if your company is failing, as is Valeo which has announced 1,600 layoffs in France, is "not responsible, it is not honest," Sarkozy said in a major address on his handling of the crisis Tuesday evening.

AFP / Expatica

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