By Shang Jun

European Union (EU) leaders are due to hold a special meeting in Brussels on Thursday, aiming at hammering out common positions at the upcoming summit of the Group of 20 (G20) major economies.

As the world economy is emerging from the recession, the EU is expected to make a new push in the reform of the global financial architecture, seek a coordinated strategy to phase out the stimulus measures and decide on its contribution to the global fight against climate change.

Sanctions against excessive bonuses

The EU has been a driving force behind the international financial reform since the outbreak of the financial crisis at the end of 2007. Ahead of the G20 summit, which is to be held in the US city of Pittsburgh one week later, there has been an increasing call within the EU for global curbs on bankers' bonuses.

EU leaders are likely to press their G20 partners to apply sanctions against those banks which perform badly but continue to hand out excessive bonuses to their top managers.

"The G20 should commit to agreeing to binding rules for financial institutions on variable remunerations backed up by the threat of sanctions at the national level," a draft to be discussed by EU leaders said.

Bankers' bonuses have come under strong criticism in the wake of the financial crisis since the current bonus culture was blamed for bank managers' reckless and excessive risk-taking, which fueled the financial crisis.

It stirred uproar when bank executives received huge amount of severance pay even if the financial institutions they managed had run into trouble.

EU leaders will say bankers' bonuses should be tied to "long-term performance" of the banks and stock options could be exercised only after a certain period of time.

They also want the G20 summit to "explore ways to limit" bonuses to a certain proportion of either total pay or the bank's revenues or profits.

In preparation for the Pittsburgh summit, finance ministers from G20 countries agreed to work on global standards on pay structure to ensure compensation practices are aligned with long-term value creation and financial stability, but they failed to adopt any specific limits on bonuses due to the reservation of the United States and Britain, which feared heavy regulation would undermine the competitiveness of their financial sectors.