By Huw Jones
LONDON, Dec 4 (Reuters) - Banks risk being broken up if theydon't behave better and have to pay ever increasing fines formisconduct, an influential banking lobbyist said on Thursday.
Nigel Wicks, chairman of the British Bankers' Association(BBA), said there has been progress in improving standards,ethics and culture at banks but more needs to be done.
The comments from a banking industry insider come just twodays after Britain's Financial Conduct Authority (FCA) slammedlenders for being complacent about improving culture after itfined banks 1.8 billion pounds ($2.8 billion) last month fortrying to manipulate currency markets.
This followed the much lower fines in the past two years forbanks seeking to rig interest rate benchmarks.
"The issue of building culture is an existential questionfor today's financial services industry," Wicks told a BBAconference on banking standards and ethics.
"If the industry fails to build the right culture within itsfirms, it's in dead trouble."
The FCA has made it clear that the fines for attempted forexrigging were increased because they were in a sense a "secondoffence," Wicks said.
He also interpreted a speech this month from William Dudley,president of the New York Federal Reserve, as an even blunterwarning to banks that failing to improve culture could be takenas evidence that they are too big to manage.
"American bankers summed up that statement to me in thewords 'you had better shape up or you will break up'," Wicksadded.
Banks must be able to justify their actions to society andtake personal responsibility for themselves, Wicks said. Strongethics were also good for business as "fine inflation" cast ashadow over bank share prices.
Banks in Britain will face an extra 4 billion pound tax billover the next five years after Finance Minister George Osbornemade changes to tax policy on Wednesday. (1 US dollar = 0.6376 British pound) (Reporting by Huw Jones; editing by Keith Weir)