HIGHLIGHTS-Comments from British Bankers' Association conference

LONDON, Oct 17 (Reuters) - The British Bankers' Associationannual conference on Thursday included speeches by top Europeanand UK regulators and senior banking executives.

The following comments were made, or were due to be made, inspeeches at the event or on the sidelines of the conference:

ALLOWING CHINA'S BANKS TO OPERATE AS BRANCHES IN UK

Andrew Bailey, CEO of Prudential Regulation Authority:

"Earlier this week, it was announced that the PRA will beprepared to see Chinese banks open branches here ... it shouldbe clear that this is not a special arrangement for China,rather it is part of a broader policy.

"This is not a free for all."

"Our stance is sensibly cautious, but not I thinkrestrictive."

"We should not design the world as if fragmentation andbalkanisation are inevitably always likely to be with us."

Anthony Browne, BBA Chief Executive:

"We welcome it massively. It would be good for London as afinancial centre. However, there shouldn't be special treatment.We need to make sure that we adhere to international standards."

EUROPEAN BANK ASSET QUALITY REVIEW:

EU financial services commissioner Michel Barnier:

"Despite substantial improvement, more needs to be done onthe quality of banking assets. We don't expect dramatic results.But of course, these exercises may throw up certain fundinggaps."

"We are shining a light into the dark corners. Showing thatwe have nothing to hide. And we will have the necessary tools inplace to address the weaknesses.

"Either banks with capital shortfalls will need to reducetheir assets or they will have to go to the markets. The latterare now operating much more smoothly.

"If banks are not able to raise capital in the markets -which could still be the case for a few - we will have a clearframework in place, with bail-in, and national and if necessaryEuropean backstops."

POLITICS AND REGULATION

John Peace, Chairman, Standard Chartered

"Politics recently has very much driven regulation. My fearis that a domestic view of political and regulatory-type issuescould have a very negative impact on the global economy and theway we globally live our lives. Protectionism is never far awayand we should always be mindful of that."

SALE OF UK GOVERNMENT'S STAKE IN LLOYDS

Danny Alexander, chief secretary to UK Treasury:

"In future sales we will look at ways in which the Britishpublic can get involved in those transactions. Because we aremending the economy the taxpayer is at last getting its moneyback."

UK HELP TO BUY MORTGAGE SCHEME

Les Matheson, RBS interim CEO, UK Retail

"I think it's always valid to raise concerns. I think wefeel it's incumbent upon us to be as helpful as we can both tothe British economy and to the government. Whilst there arealways things you've got to be careful of and wary of we thinkthat the right thing to do at the moment is to help."

TREATMENT OF CUSTOMERS

Natalie Ceeney, Financial Ombudsman Service:

"I am now starting to hear words that I like from industryleaders that I talk to. I am hearing the right rhetoric aboutturning things around. I am hearing more and more about acommitment to treat customers well."

NEW UK BANK STANDARDS BODY

Richard Lambert, tasked with setting up body:

"Its independence and governance set up is crucial ... itmust not be seen as a poodle. If it's not going to be takenseriously by the banks we might as well pack up and go home now.

"The task will get harder in 5 or 10 years time when theterrible events of the last few years have been forgotten andbank leaders no longer feel quite as committed to this sort ofidea. When things are easy and the world is back to normal thatwill be the test for this outfit."

BANKERS' PAY:

EU commissioner Barnier:

"I remain confident that the measures (to cap bankers'bonuses) are balanced and reasonable, in the interests offinancial stability. And that our legal basis is the right one.

FUTURE SHAPE OF BANKS

Bill Michael, KPMG's European head of financial services:

"Banking will become dull, and dull will be the new good.Bankers will no longer be the rock stars of the commercial worldand banking will become staid and adrenaline-free.

"Libor was a game changer for banking ... We are heading toa new place where universal banking doesn't exist as it doestoday ... In this new world retail and investment banking arenot comfortable bedfellows and will likely split."