US reform plan hurts global effort: Barclays CEO

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A top British banker condemned the United States for pushing ahead with its own financial regulatory reform which he said undermined attempts to set up a coordinated global framework for change.

John Varley, chief executive of Barclays Plc, said banks would not obstruct reform and said a "political will" was needed to drive the process of change.

"It would be possible but clearly wrong for banks to be obstructionist or behaving like ostriches, we have to conspire in these changes," Varley said on Tuesday.

"It's important that Barclays and banks are part of the dialogue, but what it needs ultimately is an act of political will."

US President Barack Obama last month unveiled proposals to limit risk taking by restricting some banks' most lucrative operations, which he blamed for helping to cause the financial crisis.

"The language of G20 was that we will move in convoy ... now what's happened is a big member of the convoy has left it and gone in its own direction. That is bad for the world, struggling as it is to create consensus around a package of reforms that the world needs," Varley said.

"It is very important that the initiatives that are taken to create reform are consistent. What I lament about what's happened in the United States is that the leader of the capital markets of the world has gone in its own direction."

Varley was speaking to a panel of UK lawmakers as part of a probe into the financial crisis. He spoke just as Britain's top banking regulator surprisingly stepped down.

Varley has led the bank since 2004 and steered it through the crisis without taking direct state help. Barclays is seen as a relative "winner" after its takeover of the U.S. operations of Lehman Brothers.

"Fail more smoothly"

Setting up "living wills" for banks should allow a lender in trouble to "fail more smoothly" in future, and once the deep reform of the industry was complete the British taxpayer should not have to have to step in to save any bank, Varley said.

"We should be able to transform the prospect of a bank having to draw on taxpayer support," he said.

Varley defended "big" banks and said there has been no correlation between a bank's size or shape and its propensity to fail, and when trouble hits, smaller ones were more vulnerable.

Varley said there was "substantial agreement" around the world on industry reforms needed, but "disagreement on how to get there". He urged regulators not to rush change and damage economic recovery.

"If the requirement is for it (reforms) to be introduced by the end of 2010 or even by the end of 2012 then it will not happen effectively," he said.

Proposals to overhaul capital and liquidity rules -- dubbed Basel III -- are due to come in by the end of 2012, but Varley said he does not expect all of the changes to be implemented.

"If every one of those proposals were implemented there's a case that that would be a step or two too far," he said