LONDON, Nov 3 (Reuters) - Smaller banks would bedisproportionately hit by new UK rules aimed at toughening theregulatory regime for senior bankers, two of the industry's mainlobby groups have warned.
UK regulators should also set different rules fornon-executive directors than for executives to ensure theyremain independent, the groups said.
The comments were made in response to proposals by UKregulators to make sweeping changes to the way senior bankbosses are regulated, aiming to make executives more accountableand including the threat of prison terms.
The joint response by the British Bankers' Association (BBA)and the Association for Financial Markets in Europe (AFME), seenby Reuters, said they were concerned supervisors expect the sameof senior managers regardless of the nature, scale andcomplexity of the institution.
"The incremental compliance costs for small banks will be amuch higher percentage of total revenue than for larger ones ...these new disproportionate overheads will act as a furtherbarrier to small banks, which have fewer senior executivesamongst which responsibilities can be shared," the BBA/AFMEpaper said.
They said guidance could also be issued for non-executivedirectors (NEDs) that set a more limited and different set ofresponsibilities.
"The risk of imposing similar requirements on NEDs as onexecutive directors is that they will effectively embedthemselves in the firm, losing their independence," the papersaid.
Britain plans to introduce a new senior managers regime(SMR) to make bosses more accountable and a certification regimerequiring lenders to assess the fitness of a bigger group ofemployees who could pose a risk to health of the firm. (Reporting by Steve Slater; editing by Susan Thomas)
Barclays (BARC)
Lloyds (LLOY)
HSBC Holdings (HSBA)
