Bank bonuses fuel French outrage

PARIS – A furore in France over executive perks was fuelled Friday by news that an ailing bank bailed out by the state is doling out EUR 70 million in bonuses to employees.

Investment bank Natixis, which received EUR 2 billion in government funds to help it survive the economic crisis, said the bonuses for 2008 will go to some 3,000 workers.

Natixis, a subsidiary of Caisse d’Epargne and Banque Populaire, currently being merged, last month reported a net loss of EUR 2.8 billion for 2008 and is laying off 1,250 workers in France and in branches abroad.

"When Natixis shareholders learn that not only have they lost everything, but that part of their money has gone to paying traders’ bonuses," they will be "completely scandalised," said Colette Neuville of the French minority shareholders group ADAM.

Shares in the bank have been hovering around EUR 1.50, far below the EUR 19.55 they sold for at its stock market launch in December 2006.

Natixis’ bonus announcement came a day after President Nicolas Sarkozy’s chief of staff Claude Gueant said a government decree would be issued next week to ban stock options and bonuses at firms receiving help from the state.

The issue of pay in state-aided firms has become a politically toxic subject across Europe and the United States, where executives at bailed-out insurance giant AIG agreed this week to give back USD 50 million (EUR 38 million) in bonuses.

Sarkozy, speaking just days after a million workers took to the streets to protest his economic policies, had this week threatened a law to cap bonuses and stock options at firms that lay off staff after getting state bail-outs.

But Gueant said that regulating by decree was "faster and easier" than putting a bill through parliament.

Details of the measure have not yet emerged, and the left-wing Liberation daily on Friday slammed it in a front-page headline as "The Phoney Decree".

The paper said it would affect only "a handful of bosses who… have already said they are giving up their bonuses or stock options for this year."

Natixis noted Friday that its directors "in December gave up all variable remuneration and no stock options have been given to them" and pointed out that its bonus payments in general were down 73 percent on the previous year.

Prime Minister Francois Fillon declined to comment directly on the latest furore over bonuses but said the government would give "extremely precise instructions to state representatives" who sit on company boards to oppose such perks.

"No one is criticising, least of all me, those who earn a lot of money for their companies and who make a lot themselves, but it is not normal when, conversely, those same people put the company in the red and are not punished," Fillon said in Marseille.

Earlier, top executives at Societe Generale bank agreed to hand back thousands of stock options after the French president described the perks as "unacceptable" given the aid enjoyed by the bank.

The chairman and the vice president of French energy giant GDF Suez, 35.7-percent state-owned, decided to give up their stock options, the company said, after workers went on strike in protest.

The company is turning a profit and is getting no crisis aid from the state but the top executives decided to part with the benefits "in the interests of responsibility," said a GDF Suez spokesman.

As the economic crisis bites, sending French unemployment soaring to nearly 2.4 million by the end of February, the government fears that anger in the workforce could spill over into social unrest.

Sarkozy’s government has sought to channel public resentment by talking tough on executive pay.

Last week it vowed to oppose a "golden parachute" for the departing boss of troubled auto supplier Valeo, Thierry Morin, who was awarded a multi-million-euro pay-off despite letting the firm sink into the red.

AFP / Expatica