Banks face 'intensive' regulation

Banks have been told they will be much more strictly supervised by the new Prudential Regulation Authority (PRA).

The warning came from Hector Sants, the incoming boss of the PRA and the current head of the Financial Services Authority.

He told an audience of senior banking executives that they could not be relied on to avoid making mistakes that endanger the financial system.

He described the new approach as "close intensive engagement".

"Central to this supervisory model is the presumption that regulators cannot rely on the judgement of the management of firms they supervise, and must take their own view formed from their own analysis of the significant issues which affect the safety and soundness of the firm," said Mr Sants.

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