Leaders of Britain, France to urge full disclosure from banks

British Prime Minister Gordon Brown and French President Nicolas Sarkozy will urge banks this week to make “full and immediate disclosure” of write-offs due to the global credit crisis, British officials said today.

The two leaders are increasingly concerned that confidence in financial markets is being hit by uncertainty over the scale of bad debts on banks’ books, which some estimates put as high as $600 billion, Brown’s office said.

Sarkozy is due to hold talks with Brown on Thursday during his two-day visit to Britain as a guest of Queen Elizabeth.

The two men will “call for greater transparency in financial markets and, as a first step, full and immediate disclosure of the scale of write-offs by banks,” Brown’s office said in a statement.

The bank crisis, especially the collapse of U.S. investment bank Bear Stearns Cos., had shown “the scale of the problem and the effect on market stability of difficult-to-value assets and of undisclosed losses becoming known in a piecemeal fashion,” it said.

Banks have written down more than $125 billion of assets since November, hammering their shares.

So far, action by central banks and governments has failed to halt the market turmoil.

Sarkozy’s visit is seen by British media as part of his drive for a close partnership with Brown.

The two leaders will call for more talks with the United States and other countries on “measures to promote financial stability,” in forums such as the Group of 7 industrialized countries, the International Monetary Fund and the World Bank, Brown’s office said.

Brown, Sarkozy and the leaders of Germany and Italy met in London in January to discuss the financial crisis.

The highest-profile victim of the crisis in Britain has been mortgage lender Northern Rock, which Brown’s government was forced to nationalize.

The financial turmoil has damaged Brown’s reputation for economic competence and helped the opposition Conservatives extend their opinion poll lead over Brown’s Labor Party.

Sarkozy and Brown will repeat calls for credit rating agencies to be more transparent and for international financial institutions to be reformed to provide early warning of financial risks to the global economy. They will call for reform of the United Nations Security Council to make it more representative, including permanent representation for Africa, Brown’s office said. Britain and France are among the five permanent members of the council.

Brown will talk to Sarkozy about a possible French contribution to a rapid reaction force of police, judges and administrators Britain plans to set up to help countries get back on their feet after conflicts, Brown’s office said.