LONDON (Reuters) - London faces a threat to its status as a global financial centre in the shake-up caused by the global credit crisis, the capital's minister said yesterday.

Niche financial markets as well as heavyweights such as New York and Frankfurt will look to take advantage of the blows London has suffered in the downturn, Tony McNulty, minister for London, told a conference at the London Stock Exchange.

"We know not just that some of the smaller niche-focused financial centres are gearing up to take trade away from London and other financial centres — the Dubais, Singapores and Mumbais," he said.

"We all equally know (the likes of Frankfurt, Paris and New York) are gearing up to do much much more pro-actively (on) the other side of the downturn to sell themselves as the global financial centre, so it is not God-given in that sense that London will return," McNulty said.

London has a reputation as the world's biggest financial centre, capturing about 20 percent of the world's total cross-border bank lending and about 34 percent of all foreign exchange transfers, he said.

Tens of thousands of jobs are dependent on Britain's largest and most lucrative industry.

But the financial crisis, in which the government nationalised some lenders and took big stakes in others, has diminished confidence.

The minister said the banking system should not return to the staid, domestic policy of the past, but warned it would take some time for the City to re-attain its international presence.

"That's an international dimension that will take some time to get back to, notwithstanding the gaps now in international banking presence and capacity in the City," he said.

"In financial service terms, what will emerge out of the downturn will be very different from how we were when we went in."

He said the public needed to know how the City would behave differently post-crisis and the G20 summit of leading industrial nations to be staged in London in April would start this process.

George Osborne, Conservative finance spokesman, told the same conference a "new moral capitalism" was needed.

"We have to change our ways: change the way we bank, the way we save and spend and change the way we are governed," he said.

Osborne said the Bank of England should be charged with taking a view on asset prices and should seek to manage the overall level of debt in the economy, adding to its powers on short-term interest rates.