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LONDON, Jan 30 (Reuters) - Britain's financial regulator has blocked Santander UK's plan to give its incoming deputy chief executive responsibility for risk management as it believes the two roles could come into conflict, people familiar with the matter said.
The British arm of Spain's Santander last month said Nathan Bostock, currently finance director of Royal Bank of Scotland, would join it this year in the joint role of deputy chief executive and chief risk officer.
But the Prudential Regulation Authority (PRA), part of the Bank of England, told Santander it was unhappy the executive overseeing the risk function would also be in a role responsible for lending decisions, the sources said.
Bostock will take the deputy CEO role, and someone else will fill the risk role, one of the sources said.
The PRA and Santander, which also released fourth-quarter results on Thursday, declined to comment.
The PRA took a similar position last year when it told Standard Chartered that its finance director, Richard Meddings, should not have responsibility for risk, too.
There is no rule against executives having dual roles, but the PRA's stance has made it clear it does not want the head of risk management to be in charge of lending decisions, which could create a conflict of interest.
Bostock is still at RBS, which this week warned it would incur 3.1 billion pounds ($5.1 billion) in new charges related to past misconduct - likely to leave it with a 7-8 billion pound loss for 2013.
Bostock, who has not been given a start date at Santander as RBS searches for his replacement, is tipped by many as a future chief executive of Santander UK.
Santander is expected to float off its UK arm, but the Madrid group's CEO said on Thursday that wouldn't happen this year, signalling 2015 at the earliest.
The UK business is restructuring to focus on more commercial lending and less on residential mortgages. It cut its UK mortgage loan book by 8.5 billion pounds last year and increased commercial loans by 2.5 billion, taking commercial lending to 12 percent of total loans. It aims to get that share up to 20 percent and said it plans "significant" investment this year to expand commercial lending.