UK watchdog to set out banking clampdown -papers

LONDON, March 15 (Reuters) - Britain's financial regulator plans to clamp down on risky mortgage lending and City bonuses in a shake-up of banking rules due this week, British Sunday newspapers reported. The Financial Services Authority (FSA) plans to announce limits on the size of loans offered to British homebuyers when it publishes its review of banking regulation on Wednesday, the Observer reported.

The move could end the practice of banks offering "extreme loans" of between five and six times' borrowers' salaries or more than 100 percent of a property's value, the newspaper said.

The FSA is planning a crackdown on management bonuses that reward short-term risk taking and will propose new rules on how banks should be run, including forcing them to hold more capital against risky trading, according to the Financial Sunday Express.

The regulator will also table new vetting procedures to ensure bank bosses are qualified to run financial institutions, the Express said.

The FSA's Chief Executive Hector Sants warned earlier this month that the financial industry should be wary of the watchdog, which is aiming to beef up regulation to prevent a repeat of the worst market crisis in more than 80 years. [ID:nLC683059] (Reporting by Philip Waller; Editing by David Holmes)