President Sarkozy has spoken. Ahead of next month’s G20 meeting, the French luminary has said that all banks in France must alter their pay policies or face exclusion from banking mandates issued by the French government. BNP Paribas, whose comparatively modest bonus pool inflamed the debate in France, has promptly sliced it in half.

Sarkozy is demanding of French banks that they a) defer traders’ bonuses over three years, with a third paid out each year, b) make a third of the total payout in stock, and c) claw back (or simply don’t pay) deferred payouts in years two or three if losses emerge. A pay czar is being appointed to ensure that all goes to plan.

With the exception of claw backs, however, the proposals don’t look very exciting at all: most banks defer a large proportion of bonuses over three years already.

Although BNP Paribas has already proven eminently susceptible to the president’s wishes, it’s also unclear whether French banks would really gain from complying with Sarkozy.

According to Dealogic, a mere 16% of investment banking fees in France came from state owned organizations last year (although this doesn’t included partially state owned enterprises like EDF). And if all French banks declined to comply with the new regime, the consequence would simply be to force the French government to use unreformed and unrepentant foreign institutions.

Sarkozy will also be pushing for bonus caps at the G20. (The Times)

Nice news for bankers at Natixis. (Financial Times)

Morgan Stanley moves on top electronic trader from Citigroup. (Financial News)

Credit Suisse hires nine in Asia bond trading. (Bloomberg)

Hedge funds are hiring once again. ( Reuters)

3.3m UK households have absolutely no one working. (Telegraph)