FSA chief says banks' difficulties may not be over

LONDON (Reuters) - Difficulties facing banks may not be at an end following the nationalisation of Bradford & Bingley, the head of the financial market regulator said on Monday.

Financial Services Authority (FSA) Chairman Adair Turner said he hoped the government's action on mortgage lender Bradford & Bingley marked a turning point.

"I think what one has to realise, as is clear from the events of the weekend with Fortis and the Icelandic bank ... we are not necessarily right at the end of this process," he added.

Bradford & Bingley became the second British bank taken into public ownership this year as a deepening financial crisis claims victims around the world.

"At the moment we believe our other High Street (retail) banks are well capitalised and in a reasonable condition but we will have to keep this situation under review," Turner said in an interview with BBC Radio.

The Belgian, Dutch and Luxembourg governments took a 49 percent stake in Fortis while Iceland took control of its third largest bank, Glitnir.

European bank shares fell sharply on Monday.

Turner said the FSA continued to review institutions across the system to make sure they were adequately funded and capitalised.

"If problems were to get severe, if the problems would get threatening, then there would be appropriate measures to make sure again that the retail depositors were fully protected and that financial stability was fully protected," he said.