Published: Wednesday, 22 Jul 2009 | 2:37 AM ET

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France's Finance Minister Christine Lagarde said banks which resume guaranteed bonus payments are an "absolute disgrace" and must be reined in by G20 leaders, the Financial Times reported on Wednesday.

It quoted Lagarde as saying in an interview that G20 governments meeting in September should introduce curbs on pay practices deemed to encourage too much risk-taking.

"It is an absolute disgrace that guaranteed bonuses of several years could still be paid, or that some people are thinking of reinstating the old ways of compensating with insufficient relationship between compensation and lasting performance and risk management," Lagarde said.

Sharon Lorimer

The newspaper said several international banks have offered multi-year guarantees to recruit and retain staff, although they says the practice has been limited to top talent.

The French government said in March it was limiting executive bonuses by banning stock options and stock grants in companies receiving state support, banning bonuses that are not linked to set targets and preventing targets from being linked to a company's share price.

Britain's financial watchdog warned banks on Monday that guaranteed bonuses that last longer than a year will break proposed rules on remuneration due to come into force next year.

Lagarde said that all leading economies should quickly adopt similar principles to those laid out by the Financial Stability Board, an international forum that will police consistency in financial rules across the globe.

"We have the rules now. It is not a question of reinventing the wheel, or procrastinating about them. It is a question of applying a set of rules that have now been agreed by the Financial Stability Board. The utmost priority should be given to their implementation," she said.

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