Speaking to the BBC in advance of his address to more than 300 financial institutions on Wednesday, Hector Sants said that the permanent financial implications of the ongoing market turbulence had put paid to the cheaper ways which banks traditionally used to raise their funds, primarily generated by selling off loan books.
Instead he said that banks would be forced to hold onto their loans, potentially pushing up the cost of borrowing.
'Banks themselves need to give consideration to how their business models will need to adapt to the changed market circumstances they have seen,' said Sants.
He also highlighted the importance of lenders adoption of 'Treating Customers Fairly' (TCF) principles if this was to be the case, making sure that all changes were handled in a suitable manner.
The issue of bonuses was also highlighted by Sants, drawing attention to the fact that some shareholders felt that they should lean more heavily on the consequences of longer-term investment decisions.
With regard to the fierce criticism received by the regulator over its Northern Rock handling, Sants explained that whilst the FSA had 'correctly identified the risks being run by Northern Rock' in its own internal review, it had failed to properly communicate its findings across to the bank's management - something which could have potentially averted the disaster.
