Banking groups push Brussels to ditch overhaul of big lenders Lord Hill, EU financial services commissioner European banks are putting pressure on Brussels and Lord Hill, the EU's financial services commissioner, to ditch plans to overhaul the structure of big lenders as part of its broader cull of misconceived legislative proposals. Since the European Commission unveiled its blueprint to reduce the complexity of big banks in January, the proposal has made little headway in the Brussels legislative pipeline and is facing resistance from France, Germany and the UK. British and French banks are calling on Brussels to "look afresh" at these plans given the incoming commission's objective to unblock the flow of credit to the real economy and avoid unnecessary EU-level interventions. The bank structure reform is part of the EU's attempt to handle banks that are too big to fail. It includes curbs on banks betting with their own funds and powers for regulators to hive off risky trading activities. Its future is one of the most sensitive political decisions Lord Hill will take this year. During his confirmation hearing to become commissioner, Lord Hill promised to "take forward" the proposal, without making clear how. It has the strong backing of the Socialists and Greens in the European parliament, but other blocs oppose many of the key elements and it has few enthusiastic supporters among EU member states. The British Bankers" Association and the French Banking Federation, in a joint letter to the commission, argue that Brussels" initiative is outdated, harmful to capital markets and complicates the implementation of existing national laws, such as the UK's Vickers reforms and more modest structural changes in France. The letter is addressed to Frans Timmermans, the commission's first vice-president, who is overseeing a review of old proposals and drawing up Brussels" work programme, which should be completed next month. "We believe there to be grounds for considering, as part of your better regulation review, whether the case for structural reform at a European level has been proven and whether the proposal can be said to pass your test of subsidiarity," say the banking groups in the letter. One overriding concern raised by opponents of the reform is the impact on capital markets of making trading activities more expensive. "There is a serious risk that the structural reform measures, as currently proposed, would constitute a considerable handicap in financing European companies," says the letter. The commission has been defending its proposal strongly against criticisms from member states, and it is rare for Brussels to ditch such high-profile plans after almost a year of discussion. Some EU officials think it more likely that the plans will be watered down. Should the proposal go ahead, one element likely to survive is a US-style ban on banks betting with their own funds. The original proposal defined this narrowly so that it would barely change banks" current operations but further revisions are expected to ensure market-making is not hampered. Diplomats expect even more discretion and flexibility to be given to supervisors over how and when a bank's trading activities should be hived off.