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INTERVIEW-EU bank reformer Barnier warns against Brussels red tape

John O'Donnell
Wednesday, 19 Feb 2014 | 8:30 AM ET

* EU regulatory chief says financial reform drive complete

* Barnier says more red tape could boost eurosceptics

* Barnier says stop blaming Brussels for home-grown problems

BRUSSELS, Feb 19 (Reuters) - Michel Barnier, who led an unprecedented overhaul of European banks after the financial crisis, has declared his reform drive complete and pledged less red tape if he wins the post of European Commission president.

Barnier, the European Union's financial services chief, has introduced as many as 28 different laws to make banks less risky, from caps on bankers' bonuses to minimum capital cushions against high-risk loans.

His reforms have angered bankers and politicians in Britain for what they see as meddling in the City of London financial centre.

Speaking to Reuters, Barnier said that he did not believe further legislation beyond what he has proposed was needed for now and highlighted the risk that unnecessary rules from Brussels could bolster eurosceptic politicians.

"I believe we now have the tools to anticipate, prevent and if necessary mitigate and manage a crisis," he said.

"Banks are still banks. But banks are better capitalised, better governed and supervised. There has been a lot of change."

This marks a shift in tone after Barnier's drive over more than four years to make up for regulatory inaction before the financial crisis.

Barnier has introduced groundbreaking rules, such as handing supervision of euro zone banks to the European Central Bank, a change that will stand for years to come.

But his many laws have not yet solved one of the most politically-charged problems facing finance - how to deal with the risks of 'too-big-to-fail' banks.

"BIG" OR "SMALL" EUROPE?

The Commission is now preparing to renew its president and group of commissioners that set policy for some 500 million Europeans across a whole range of areas.

A new Commission president will take office for five years from November, succeeding Portugal's Jose Manuel Barroso who has led the institution since 2004.

Barnier, who will seek the backing of centre-right politicians and lawmakers to run for the post of Commission president, cautioned against over regulation.

"One of the issues at the heart of populist movements is the perception that Europe is too present in every bit of one's life and is trying to deal with everything," he said.

Barnier's message echoes other candidates for the post, which include former Latvian Prime Minister Valdis Dombrovskis who pledged in Brussels this week to deliver "more Europe on big things and less Europe on small things".

Both men will seek the backing of politicians including German chancellor Angela Merkel at a meeting of the centre-right European People's Party in Dublin on March 6-7.

LESS RED TAPE

"I believe we need to be doing less red tape, less bureaucracy and more politics," Barnier said. "There is lots of areas where we can be simpler in our approach."

He criticised eurosceptic political groups for blaming home-grown problems on Brussels.

"They take the approach of always saying it's someone else's fault, it's Brussels fault. It is not Brussels ... which explains why France's budget has been in deficit for the last 40 years."

"The problem of French competitiveness and reform - it's not Brussels that created these problems," he said. "If you are going to have the solidarity in the euro zone then you also have to accept the rules that come with it."

In the race to become Commission president, Barnier also faces competition from former Luxembourg Prime Minister Jean-Claude Juncker, who recently won Merkel's backing.

Juncker was a key broker in handling Europe's debt crisis, leading the Eurogroup of euro zone finance ministers.

But Juncker was caught up in a spying scandal in Luxembourg last year and his Eurogroup successor and Dutch finance minister, Jeroen Dijsselbloem, described him on Dutch television as a heavy drinker and smoker. Juncker has dismissed these claims.

The Socialists and Democrats, the second-largest group in the European Parliament, have selected Germany's Martin Schulz, the president of the European Parliament, as their candidate.

The third biggest bloc, ALDE, the alliance of Europe's Liberal parties, has chosen Guy Verhofstadt, a former Belgian prime minister.

Whichever wins the most seats in the May 22-25 European Parliament elections is expected to lay claim to the Commission presidency.

(Reporting By John O'Donnell. Editing by Jane Merriman)