G20 meeting agrees on bonus ‘clawback’

Ministers at the G20 meeting in London have agreed a 'clawback' scheme, advocated last week by Gordon Brown, which would see bonuses linked to deals which are successful in the long-term. If deals on which bonuses are paid fail over their lifetime then bonuses will be returned by the bankers who received them.

The groundbreaking agreement has been designed to limit the negative economic effects of deals which go wrong and help the global recovery continue to take hold. The Chancellor Alistair Darling said the new clawback measures would mean financial companies are "focused on long-term sustainability and strength" and would result in staff not being "rewarded for reckless behaviour".

However a plan put forward by the German and French governments to cap bankers' pay was rejected as a result of protests from the UK and US administrations.

The French finance minister Christine Lagarde had made a statement indicating her opposition to guaranteed payments the day before the summit, a position rejected by Alistair Darling.

The G20 ministers also agreed to keep stimulus measure going to keep the global recovery moving towards improvement, however on this issue too there has been disagreement. Germany and France have seen a more solid recovery than the UK and have consequently been looking at ways to reduce stimulus plans. However in London they decided not to force the point home.

WHAT THEY ARE SAYING:Richard Northedge in the Independent: "There is pressure to reach agreement before the financial crisis ends and memories fade, but even if G20 leaders agree a global code, different countries will apply it with differing rigour and international disputes are likely to ensue."

Ashley Seager in the Guardian: "Gordon Brown eventually, but reluctantly, signed up to a joint letter with French president Nicolas Sarkozy and German chancellor Angela Merkel last week pledging to look at ways to cap bankers' bonuses. But that merely echoed a similar statement by the G20 earlier this year and, as [Lord] Turner suggested, only deals with a symptom of the problem, not its cause." ·