Finance ministers from the world's 20 leading economies have set their sights on multi-million euro bonuses paid to some bankers. The explosive issue of bank bonuses is being pushed by Europe's largest economies.

"Our citizens are deeply shocked at the revival of reprehensible practices, despite taxpayers' money having been mobilized to support the financial sector," Chancellor Angela Merkel, British Prime Minister Gordon Brown and French President Nicolas Sarkozy said in a letter released before the start of the meeting.

Sarkozy has called for bankers' bonuses to be capped, an idea which found broad support among European finance ministers earlier this week. Britain has been reluctant to support a cap, for fear it could cause bankers to move their business out of London. But there is British support for tying bonuses to long-term performance.

The bonus practices are seen as helping create banking culture which critics say is too focused on risky, short-term gains.

One issue which Germany is expected to push is for rules limiting the size of banks.

"No bank should be allowed to become so big that it can blackmail governments," Merkel said earlier this week.

Crisis not over

British Finance minister Alistair Darling, the host of the G-20 meeting, warned against complacency in an interview with The Independent newspaper.

"The biggest single risk to recovery is that people think the job is done. There is a real risk that either governments or people generally think 'We have done that, we are on the path to recovery,' " he said.

That feeling was echoed by Merkel, Brown and Sarkozy, who warned that we have not yet seen the end of the global economic crisis. They urged colleagues to continue exercising "prudence and caution" saying that a bumpy road lies ahead.

Besides bankers' bonuses, finance ministers will also discuss how to go forward with huge stimulus packages introduced at the beginning of the crisis. While G-20 countries need to show their commitment to implementing stimulus plans, they also need to begin coordinating exit strategies once the crisis has ended, the three leaders said.

Germany is concerned about inflation and has talked about the need to ease up on stimulus spending. Britain, which is still in a recession, has been more cautious.

"We must be careful to avoid laying the foundations of new global imbalances," the leaders wrote.

The talks, being held Friday and Saturday, will lay the groundwork for an upcoming meeting of G-20 leaders in Pittsburgh, US.

th/Reuters/AFP
Editor: Nancy Isenson