Identifier
Created
Classification
Origin
09ROME1019
2009-09-01 15:16:00
CONFIDENTIAL
Embassy Rome
Cable title:  

G20: ITALIANS SEE EUROPE DIVIDED ON BANKERS'

Tags:  EFIN EINV ECON OECD IT 
pdf how-to read a cable
VZCZCXYZ0019
PP RUEHWEB

DE RUEHRO #1019 2441516
ZNY CCCCC ZZH
P 011516Z SEP 09
FM AMEMBASSY ROME
TO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 2614
INFO RUEHSS/OECD POSTS COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1388
RUEHBR/AMEMBASSY BRASILIA 0605
RUEHNE/AMEMBASSY NEW DELHI 0868
C O N F I D E N T I A L ROME 001019 

SENSITIVE
SIPDIS

DEPT FOR EEB/IFD/OIA WESLEY SCHOLZ

E.O. 12958: DECL: 09/01/2019
TAGS: EFIN EINV ECON OECD IT
SUBJECT: G20: ITALIANS SEE EUROPE DIVIDED ON BANKERS'
COMPENSATION ISSUE

REF: 09 ROME 395

Classified By: Acting Econ Minister Counselor William Meara for reasons
1.5 (b) and (d)

C O N F I D E N T I A L ROME 001019

SENSITIVE
SIPDIS

DEPT FOR EEB/IFD/OIA WESLEY SCHOLZ

E.O. 12958: DECL: 09/01/2019
TAGS: EFIN EINV ECON OECD IT
SUBJECT: G20: ITALIANS SEE EUROPE DIVIDED ON BANKERS'
COMPENSATION ISSUE

REF: 09 ROME 395

Classified By: Acting Econ Minister Counselor William Meara for reasons
1.5 (b) and (d)


1. (SBU) Summary: A senior aide of Italy's Finance Minister
told econoff August 31 that in the runup to the next G20
meeting Europeans remain divided on how to regulate
compensation of financial sector executives, a point Italians
expect to be high on the Pittsburgh agenda. The aide also
ventured that the Germans, distracted by their looming
election, are unlikely to engage issues and partners
vigorously in upcoming pre-G20 talks. End Summary.


2. (C) Francesco Galietti, a senior advisor to Italian
Finance Minister Giulio Tremonti on August 31 outlined to
Econoff the state of play among the big European economies in
the run-up to the September 24-25 G20 meeting. Prior to
Pittsburgh, the Europeans will have two preparatory events.
On September 2, EU Finance Ministers will meet in London and
on Sep 17 (to be confirmed) there will be a further EU
summit in Brussels to attempt to pull together a common
position on regulation of financial sector executive
compensation.


3. (C) According to Galietti, France is the leading
advocate for a compulsory approach for limiting executive
compensation, either through absolute caps on salaries, or by
forbidding certain compensation package structures, e.g.
those that reward excessive risk taking or place too much
emphasis on short-term performance. Britian, says Galietti,
opposes any compulsory measures. Italy for now is taking the
middle ground, having adopted restraints on compensation for
executives at Italian banks (seven total) that have
benefitted from state assistance, as per under the Tremonti
Bonds scheme (REFTEL). Galietti thinks it unlikely Italy
will push for measures that go beyond this "soft law"
approach; Italian economic policymakers agree that a
compulsory system would make it difficult for financial
institutions to attract and retain essential top managerial
talent.


4. (C) The big question mark surrounding pre-G20 European
deliberations is Germany, said Gallieti. Italians are
speculating whether, in view of their Sep 27 elections, the
Germans will send senior officials or lower level bureaucrats
to the London or Brussels meetings. Notwithstanding the
latest Merkel-Sarkozy call for unity behind a proposal with
teeth, Italians are uncertain about how much energy and
attention German policymakers will give the issue over the
coming weeks. For now, Italy intends to let France and
Britain and their respective camps fight it out on the
compensation issue, with the hope that they will emerge with
a compromise along the lines of the one Italy has implemented
at home.
THORNE