Testifying before the Treasury select committee, which is looking to reform the banking system, the Barclays boss defended large banking institutions. Varley said the unilateral US plan on capping banks' sizes would not remove the risks involved. "The system would not be served by making big banks smaller; the system would be served by making big banks safer," he added.
Former US Federal Reserve chairman Paul Volcker's eponymous plan, endorsed by the Obama administration, calls for a break up of large banks. The US president jolted the financial markets with his intention to stop banks using the money of their depositors' to take bets on markets through proprietary trading, hedge funds and private equity investments.
Varley sees such potentially draconian rules as harmful for the banking industry. Appearing before the committee, he said he disagreed with Bank of England governor Mervyn King over the quantum of reform still needed by banks to make them less taxpayer-dependent when they are on the verge of failure. The BoE governor had earlier said that it should be made "very clear" to banks that "radical reform is on the table".