Pressed by the French president Nicolas Sarkozy, the French banking sector - including BNP Paribas SA and Société Générale SA - has agreed to implement a new bonus system. The gist of the system is:
- that French bankers can still get a bonus if they perform well,
- but a large part will be lost if less profit is made then expected,
- while only 1/3 will be paid immediately with the rest to come over a 3 year period, provided there is no reason for the remainder to be put on hold.
Also a French pay czar was appointed; the 76 year old Michel Camdessus, who was involved in some of the IMF's biggest-ever country bailouts in the 1987-2000 era (including Indonesia, Russia and Argentina).
Maybe the biggest stick used by the French government is simply the president's threat that non-complying banks will not be in a position to conduct business with the state. As Sarkozy allegedly said: "I want non-complying banks to be punished." Loud and clear.