UK govt urged to set up new body to help investment banking thrive

LONDON, Nov 13 (Reuters) - Britain's government should setup a new body chaired by the finance minister to ensure bankingregulation is not excessive and help coordinate policy sointernational banks can thrive in London, the country's bankinglobby group said.

The British Bankers' Association (BBA) said on Friday thenew agency should have responsibility for ensuring delivery ofpolicy for international banking and the regulatory approachacross government departments and regulators.

It should be chaired by Finance Minister George Osborne andinclude the governor of the Bank of England, the BBA said.

The proposal was one of 23 recommendations set out byBritain's former top financial regulator Hector Sants, nowvice-chair at consultancy Oliver Wyman, in a report for the BBAon the industry's competitiveness.

It said Britain should also consider bringing changes to itsbank tax into force earlier and setting up a new independentagency to determine penalties imposed on banks and how theyshould pay compensation to customers.

The report said changes are needed because London'sattractiveness as a destination for international investmentbanks was being eroded by factors including unilateralregulation, tax uncertainty and weakening profitability acrossthe industry.

"Wholesale banking is an internationally mobile industry andthere is a real risk this decline could accelerate," saidAnthony Browne, BBA Chief Executive.

He said many banks had been moving jobs away from London andBritain's market share of activities linked to capitalformation, such as cross-border lending and initial publicofferings, was static or falling.

The BBA said the government had adopted a more positivestance towards banks since an election in May and it should nowset out its plans for "stable policy and regulation" ofinternational banks, which account for more than 30 percent ofthe 405,000 people working in banking in Britain.

The BBA and Oliver Wyman report, titled "Winning the GlobalRace'", also said supervision of investment banking conductshould be beefed up by introducing more specialisation at theFinancial Conduct Authority. (Reporting by Steve Slater; Editing by Mark Heinrich)