By Matt Scuffham
LONDON, June 9 (Reuters) - New proposals to improvestandards and culture within UK banks will be thrashed out byBritish lawmakers in important meetings next week which couldshape the industry for years to come.
The Parliamentary Commission on Banking Standards, led byConservative Andrew Tyrie, was set up by the government lastJuly after Barclays was found to have manipulatedglobal interest rate benchmarks, sparking public outrage.
After months of compiling evidence from former and currentbank executives, regulators, central bankers, academics,politicians and consumer rights activists, the committee isputting the finishing touches to a 600-page report and willdebate it on Monday and Tuesday, industry and political sourcessaid.
One of the areas which will be most intensely debated willbe the future of RBS, 81 percent-owned by the government.
Some members of the commission, including former BritishFinance Minister Nigel Lawson, want the bank to be broken up,with its toxic assets hived off into a 'bad bank', leaving theresulting 'good bank' better placed to increase lending toBritish households and businesses.
But others are concerned that not enough evidence has beenconsidered on the matter. Outgoing Bank of England GovernorMervyn King brought the issue to the fore by recommending abreakup of RBS in the last of 73 sessions in which he gaveevidence to the committee as part of its industry-wide review.
Commission sources have said the report will put forwardsuch a move as an option but will not make a definitiverecommendation on whether it will be implemented.
The commission's final proposals will suggest there is notenough competition within the industry, the sources said, andthat Britain's major banks are still not adequately regulated.
"One of the key issues is that the major banks are too bigand too complex to be able to provide effective corporategovernance," one commission member told Reuters.
Ways to create new banks and foster competition in theindustry will be considered by the committee. Suggestions bysome members that customers switch accounts more easily andstart-up banks carry less capital are already being implemented.
The commission may also recommend a review into theviability of an industry-wide IT platform, which would enablecustomers to keep their account numbers when they change banks.
Excessive pay will also be tackled: the committee willlikely recommend tougher sanctions against executives associatedwith failed banks to stop them working in the industry again.
The commission is aiming to publish the report on June 17,according to one source, two days prior to British FinanceMinister George Osborne's annual Mansion House policy speech toLondon's financiers. A spokesman declined to comment.
So far the committee has achieved a success with Osborneadopting its proposal to give regulators the power to breakbanks up if they abuse new rules designed to protect retailers'deposits from riskier investment activities.