Kent Reliance, the new hybrid mutual, will be joining the fight against higher capital reserve rules imposed on banks.

The Independent Commission on Banking has upset smaller financial organisations by proposing an increase from seven to 10 per cent.

The measure is mainly aimed at the large banks that had to be bailed out by taxpayers.

But Jeremy Wood, chief executive of Kent Reliance Banking Services (KRBS) - comprising OneSavingBank Plc and Kent Reliance Provident Society - says it would be unfair for smaller institutions.

"It sounds as though we would be whining if we said it's not fair, but the cards do feel like they are stacked against small players," he said.

J C Flowers has injected £50 million into KRBS, paving the way for resumed lending and the offer of better savings rates and new products.

But the new capital requirement would hit the Chatham-based organisation at a time when it is striving to achieve profitability. Mr Wood said it would be achievable over time "but we would have to plan our business accordingly. Our future projections are not planned for that level."

The priority, he said, was getting back to a sustained level of profitability.

The Building Societies Association is expected to oppose the proposal. If the new rule does come in, Mr Wood would like it phased in gradually. Otherwise, it would "punish" smaller organisations and "be rather biased towards the larger groups who a) can raise capital and b) have huge capability to make profit."

Mr Wood took over from Mike Lazenby soon after the new structure slotted into place. Like his predecessor, Mr Wood is a former director - he was in charge of operations - at Nationwide. He is currently on an interim contract but makes no secret of his wish to keep the job full-time.

Mr Wood said he was excited by the new structure which had almost certainly saved the institution. "This has got to be about turning the fortunes of the society around and getting ourselves back into a profitable situation. If we don't do it, we might not survive. We can't sustain losses for ever."

He added: "I liked what I saw here because a capital lifeline had been thrown by Flowers. I'd like to think it can be managed back to profitability and grow."

Mr Wood is reviewing all aspects of the business, including its processing subsidiary in Bangalore and Pune, India, where it employs around 150 people. It also has a profitable mortgage lending business in the Channel Islands.

"We want to be able to offer good products in the top quartile, but sustainably good products. We don't want to attract people in for a short period and then revert them into a sub-standard product. We will offer our members good pricing for the long-term.