UK banks urge regulators to take stock

Britain's banks are batting back accusations they have already forgotten the financial crisis that struck last year, insisting they are revamping and bracing for a "very different" future.

In the first of a series of documents detailing the changes adopted by the industry and ongoing reforms, the British Bankers Association (BBA) trade body urged regulators to take stock of the current industry overhaul before ordering any more.

"The key question as we enter into discussion about further reform measures is whether we have reached the point at which we really ought to be drawing a line for fear of diminishing and counter-productive returns," it said.

Banks have been vilified since the collapse of U.S. giant Lehman Brothers last year helped trigger a credit crisis that forced taxpayers to prop up the once-prosperous industry — and focused public scrutiny on bonuses, credit availability and government support.

As the Financial Service Authority (FSA) regulator told banks to plan for their orderly demise with "living wills" or risk the prospect of separating their retail and trading activities, the BBA said change was already far-reaching.

It called on regulators to ensure banks, which face higher capital and liquidity requirements, have the capacity to continue to lend, that liquidity and countercyclical measures are based on international agreement and that watchdogs kept an eye on the costs of proposed regulatory change.

"There is a distinction between needing to keep a foot on the pedal in terms of dealing with the immediate consequences of the crisis and shoring up the sector and 'switching on' measures aimed at countering cyclicality," it said.

"Introduce these measures prematurely and the recession will be prolonged; allow the moment to pass and an opportunity will have been missed. Timing therefore is an essential component in the formula."