Credit Herald

European Central Bank President Jean-Claude Trichet said banks must avoid paying out “unwarranted” bonuses as they patch up their balance sheets.

“I urge banks to take full advantage of the recent recovery in their profitability to strengthen their capital positions, rather than to distribute a large part of their profits or to pay out unwarranted levels of compensation or bonuses,” Trichet said in a speech in London today.

French and British politicians targeting bonuses with taxes amid public anger after governments gave them $5.3 trillion of aid during the credit crisis. The U.K. said Dec. 9 all British banks awarding discretionary bonuses of more than 25,000 pounds ($40,000) between now and April must pay a levy of 50 percent no fax payday loan. France will enact a tax next year on 2009 banker bonuses, President Nicolas Sarkozy said today.

Trichet also said that last week’s decision to withdraw the bank’s non-standard liquidity measures next year is not a signal on future interest rates.

The decision to start the exit from the liquidity measures was “no signaling concept in terms of the monetary policy stance” and interest rates, Trichet said. He added that the unwinding of the measures will be “orderly and timely.”

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