British banks need to plan for a potentially disorderly break-up of the euro zone,

British banks need to plan for a potentially disorderly break-up of the euro zone, or the exit of some countries as part of their contingency planning, as the sovereign debt crisis shows no sign of abating, a top regulator said on Thursday.

Andrew Bailey, deputy head of the Prudential Business Unit at the UK's Financial Services Authority (FSA), said UK banks don't have large exposures to the euro zone, but must plan for the worst.

"We cannot be, and are not, complacent on this front," Bailey said at a conference. "As you would expect, as supervisors we are very keen to see the banks plan for any disorderly consequence of the euro area crisis.

"Good risk management means planning for unlikey but severe scenarios and this means that we must not ignore the prospect of a disorderly departure of some countries from the euro zone.

"I offer no view on whether it will happen, but it must be within the realm of contingency planning," he said.

Bailey, who was Chief Cashier at the Bank of England, moved to the FSA as part of preparations for a shake up of UK financial supervision from 2013.

He will be deputy head of the new Prudential Regulation Authority which will be a subsidiary of the Bank.

Bailey said the resilience of UK banks has improved substantially since the 2007-2009 near meltdown of the global financial system.

"Today, UK banks are not front-and-centre of the problem," Bailey said