Proposed U.K. bank reforms could result in a smaller presence in the U.K. for Banco Santander SA, Ana Botin, the bank's U.K. Chief Executive Ana Botin warned U.K. lawmakers in a letter published Thursday, as she and other U.K. bank bosses said they expected the rules to cost far more than their creators' estimates.

Botin, in a letter to the House of Lords Economic Affairs Committee, said Banco Santander remains committed to the U.K., but that "increasing potential costs could in the future affect investment decisions and therefore the size of our U.K. business within the group."

The bank has become a major challenger to rivals Barclays PLC, Royal Bank of Scotland Group PLC, Lloyds Banking Group PLC and HSBC Holdings PLC since entering the country with its purchase of Abbey National in 2004. In the U.S., Santander owns Sovereign Bank in Boston.

Botin estimated the annual costs of the reforms, which have received initial endorsement from the government and are due to be written into law next year, could be closer to 10 billion pounds ($15.6 billion), rather than the 4 billion pounds to 7 billion pounds estimated by the Independent Commission on Banking that developed the reform package.

In a separate letter to the committee, HSBC Chairman Douglas Flint said he also thinks the costs will be higher than those estimates, mainly because of a sharp rise in funding costs, and that just raising the additional debt required under the rules could cost HSBC $2.8 billion before tax.

The U.K. Independent Commission on Banking in September called for banks to hold as much as 20% capital against their assets — far more than most international peers — and to segregate or ring fence their retail arms from other activities.

The aim of the rules is to make the banking system safer, encourage competition and reduce the chances of any taxpayer bail-outs of the sector after a debilitating financial crisis for the country.

The House of Lords Thursday released a report including letters from bank executives who testified last month on the reforms, but did not make its own recommendations, citing time constraints.

RBS Chief Executive Stephen Hester said RBS's estimates have come in higher than the ICB's, and that the bank's implementation costs alone could be up to 1 billion pounds, plus hundreds of millions of pounds in ongoing operational costs.

In his letter responding to the House of Lords' question on how much he expected the rules to cost, Lloyds Chairman Win Bischoff did not give a "rival" estimate to the ICB's figure, but said the bank does expect the benefits to the wider economy will outweigh their costs "if implemented well."

Barclays chief executive Bob Diamond struck the most moderate tone, saying the 4 billion pounds to 7 billion pounds figure appears to be a "reasonable estimate" but that the bank isn't able to accurately assess the costs until the final shape of the rules becomes clearer.

Chancellor of the Exchequer George Osborne has already endorsed key elements of the ICB report and said the government will make a written response by mid-December.

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