BRUSSELS (AFP) - The European Union may scrap plans to force banks to separate risky trading activities from their core business following fierce opposition by the bloc's most influential states, a document seen by AFP showed Friday.

Axing the plan would be the first tough decision for the EU's new financial services commissioner, Jonathan Hill, and revive accusations of his alleged close ties to London's banking establishment that nearly torpedoed his nomination to Brussels.

In a letter addressed to the commission's First Vice-President Frans Timmermans, seen by AFP, Hill suggests that if an ambitious proposal made by his French predecessor Michel Barnier fails to gain traction, the project should be abandoned.

"We need to see how much progress is made... on banking structural reform, where Member States are pulling in different directions in opposition to it," Hill writes in the letter, which is dated Nov 18.

"So withdrawal could be an option next year if Member State support does not pick up," he said.

Hill adds, however, that it would be "premature" to withdraw the proposal now and advises Timmermans that more time is needed to decide the matter.

The plans are aimed at avoiding a repeat of the global financial crisis, when several European governments had to bail out failed banks with billions in state funds.

France, Germany and Britain - all seeking to protect their flagship banks - were irritated by the proposals, arguing their own national laws go far enough.

But the very suggestion of withdrawing the plan has drawn anger from key members of European Parliament.

Top Green MEP Philippe Lamberts revealed the existence of the letter to the media.

"Given Mr Hill's history as a financial lobbyist, it was fairly obvious that he would work for the weakening of European legislation on finance," he said.

Hill's strategy "is frankly insulting and scandalous," Lamberts said.

The Barnier proposal from earlier this year focused on 30 of Europe's biggest banks, considered "too big to fail" with outsize balance sheets often bigger than the yearly gross domestic product of their country of origin.

The ambitious reform plan included a ban on banks trading on their own account as well as forcing lenders to hive off some of their riskiest activities.

Scrapping Barnier's reform would be part of the new Commission's plan to strip the EU's vast bureaucracy of policy proposals that have little chance of coming to fruition.