IN European capitals, the initial shock caused by the shut down July 5 of the Bank of Credit and Commerce International is giving way to a searching debate about the best way to prevent such a colossal fraud ever happening again.Top officials of the European Community (EC) will be prominent in setting new banking guidelines and devising "early warning" arrangements for detecting large-scale bank fraud. Sir Leon Brittan, vice president of the European Commission, said July 29 that the EC would act swiftly to strengthen Community-wide bank supervision if the BCCI affair revealed weaknesses in the present structure. But leading financial experts say it will take a year or more to get to the bottom of the "hanky-banky" that enabled directors of BCCI to trade insolvently while stripping the bank of its assets and allegedly using them to finance the narcotics trade and espionage activities worldwide. A New York grand jury initiated the first criminal indictments against the bank on July 29. "Only when we understand in detail what happened," a Bank of England official said, "will it be possible to fashion regulatory instruments sophisticated enough to forestall a repeat performance." Robin Leigh-Pemberton, governor of the Bank of England, told a House of Commons committee that the main difficulty in deciding whether to shut down BCCI had been telling the difference between "individual acts of fraud" and "systematic fraud." "If we closed down a bank every time we had a fraud, we would have rather fewer banks than we have," he said. Mr. Leigh-Pemberton, whose closure of BCCI created a political storm in Britain, was accused by the Labour Party opposition of being too slow to recognize what he told the committee was the "criminal culture" of the bank. The governor defended himself by saying that he had been warned as long ago as April 1990 about BCCI's "possible fraudulent activities," but there had been no proof. Leigh-Pemberton denied that Prime Minister John Major had received information on large-scale BCCI fraud before June. And he indicated that when an inquiry now being set up by the British government got fully under way he would defend the Bank of England against criticism of its own role in monitoring the BCCI. Richard Dale, professor of international banking at Southhampton University, says regulatory arrangements for keeping tabs on BCCI had "obviously failed." Speaking of international banking, he says: "What is needed now is new guidelines and better supervisory arrangements. There must be consolidated regulation, with free exchange of information. That will not be easy to achieve." He points out that BCCI had had branches in 72 countries. Many of its activities had been undertaken in conditions of extreme secrecy. The secrecy had helped to cloak skulduggery which, according to informed speculation in the City of London, may have resulted in fraud of up to $15 billion. Mr. Brittan, whose duties include financial services supervision in the EC, told the London Financial Times that in the future supervision should as far as possible "be led by the member state in which the group's banking business is being done." But there had to be much more extensive pooling of information and a readiness to act when wrong-doing was detected or suspected, he said. According to Brittan, agreements on information-sharing with supervisors outside the EC was "not a luxury but a necessary condition" for maintaining "stable and transparent" financial markets. It is here, however, that the problem of keeping international banking clean becomes most difficult, Professor Dale says. "Unfortunately the British inquiry into BCCI's collapse will not address this question. International bank regulation is a complicated area, and responsibility has to be distributed among national authorities. There has to be a full-scale review of present arrangements," Dale said. He noted that BCCI split its banking operations between two main subsidiaries: in Luxembourg and the Cayman Islands, ruling out consolidated supervision. While attempts to find an answer to the threat of giant-scale banking fraud gathered momentum, the plight of BCCI investors and deposit-holders showed no sign of easing. More than 50,000 deposit-holders in Britain alone have had their accounts frozen. Their case has been taken up by Keith Vaz, a member of parliament, who on July 28 petitioned Mr. Major to support a rescue package for the bank. But Major's officials said no promises could be made. Deposit-holders' hopes sank recently when it was reported that Abu Dhabi's Sheikh Zayed bin Sultan al Nahyan, a 67 percent shareholder in BCCI, would be unwilling to help customers outside the Gulf region. Brittan said an area in which the EC would be active in the future would be fostering deposit-insurance schemes. He said a draft EC directive setting minimum standards for deposit-insurance was expected in the first half of next year. In Britain however the banking authorities traditionally have been opposed to generous deposit insurance. A banking source said the BCCI affair might "change a lot of minds," depending on the amount of pressure the bank's angry investors were able to put on the Major government.