British crackdown threatens banking sector - BBA

Says banking industry may decline like shipbuilding

Says bonus tax may force overseas banks to quit UK

LONDON, Dec 31 (Reuters) - Britain's regulatory crackdown on banks could push the sector into a decline similar to the one suffered by its steel and shipbuilding industries, the head of the UK's main banking lobby said.

The British government risks imposing tougher constraints on its banking industry than other countries, eroding the sector's international competitiveness and potentially forcing some lenders to relocate overseas, British Bankers' Association Chief Executive Angela Knight wrote in a blog.

"The UK has a record of building up great industries such as in steel, shipbuilding, engineering. It also has a history of losing them," Knight said.

"Be angry at the banks by all means, but it would be the height of irresponsibility to lose this industry as we have done with others so many times before."

Knight added that the government's one-off 50 percent tax on bankers' bonuses, announced earlier this month, had already led some foreign banks to consider leaving Britain.

"Because no other country has curbed pay deals in the same way, overseas banks operating here are now very concerned and considering their long-term commitment to this country," she said.

The bonus tax, aimed at curbing payouts deemed excessive in an industry that had to be bailed out with public money after last year's global financial crisis, comes on top of a new 50 percent income tax rate on earnings over 150,000 pounds.

Rising personal taxation, along with proposals for higher capital requirements and new rules obliging investment banks to put in place potentially costly disaster recovery plans, have stirred fears that London could lose business to rival financial centres such as New York and Hong Kong. (Reporting by Myles Neligan; Editing by Rupert Winchester)