LONDON Tue May 27, 2014 5:08am

Progress in completing banking reforms to plug gaps highlighted by the 2007-09 financial crisis is too slow and is being hampered by fierce industry lobbying, the International Monetary Fund said on Tuesday.

IMF Managing Director Christine Lagarde said  were holding more capital now than they did in the run-up to the financial crisis when taxpayers had to shore up the sector.

"The bad news is that progress is still too slow, and the finish line is still too far off," Lagarde told a conference on economic inclusion in London.

While the task of reforming  is complex, progress is also being held back by "fierce industry pushback" and fatigue that is bound to set in at this point in a long race, she said.

"A big gap is that the too-big-to-fail problem has not yet been solved," Lagarde said, referring to the belief in  that governments will still step in to rescue the biggest banks to avoid the mayhem seen when Lehman Brothers collapsed in 2008.

The IMF estimated that the implicit subsidy or cheaper funding costs from being too big to fail amounted to about $70 billion in the United States and up to $300 billion in the . Mark Carney, chairman of the Financial Stability Board, a regulatory task force for the Group of 20 economies (G20), has said he wants the too-big-to-fail phenomenon "cracked by Christmas" but faces challenges in Europe and Asia.

Lagarde also called for regulators across the world to agree a framework for winding down big banks in trouble.

"This is a hole in the financial architecture right now, and it calls for countries to put the global good of financial stability ahead of their parochial concerns," Lagarde said.

After the bruising experience of the financial crisis, trust among international regulators is still not high enough as some countries continue to take extra initiatives on bank capital to keep local taxpayers off the hook.

The FSB is worried that such measures, like the Federal Reserve's plans for extra capital requirements on foreign lenders in the United States, will split capital .

Lagarde said, "We need to be mindful of the risks of fragmenting the global financial system and hampering the flow of credit to  investment."

"But complexity is not an excuse for complacency and delay," she said.