By Huw Jones

LONDON (Reuters) - President Donald Trump's review of post-crisis banking rules could sound the death knell for new global standards now being finalized and rip apart a common approach to regulating international lenders, bankers and regulators said.

Central banks and watchdogs around the world have spent the past eight years drawing up regulation aimed at preventing a repeat of the 2007-2009 financial crisis, but there are fears that project could unravel after Trump said he wants the U.S. to row back on capital rules.

Trump's order for a regulatory review to overcome what he sees as obstacles to lending came as banking watchdogs were trying to complete the final piece of global capital requirements, known as Basel III.

Given that the United States wants to shrink the banking rule book, there are doubts over whether the Basel rules can make it over the finishing line next month if they don't have backing from the United States.

Without support from the world's biggest capital market, other countries would be less willing to commit too.

The core aim of the outstanding part of Basel III that regulators are working on - dubbed Basel IV by critical banks who worry about more stringent capital requirements - is to impose more consistency into how banks calculate the amount of capital they hold against risky assets like loans.

JPMorgan chief executive Jamie Dimon said in the aftermath of the financial crisis that European rivals had been "a lot more aggressive" than American banks in calculating capital, meaning they were holding less.

European policymakers have rejected that criticism, but their region's banks have been lobbying against the remaining Basel rules, saying they would force them to increase significantly the amount of capital they need to hold.

If the United States fails to approve the completion of Basel III, the perceived problem that European banks get away with holding less capital than U.S. lenders may not be properly tackled, a source involved in the negotiations said.

"It's in the interests of American banks to get this done," the source said.

Others are less optimistic that a deal can now be done after Trump's intervention.

"It's going to delay completing Basel III, and perhaps lead to it not being concluded," an adviser to banks said on condition of anonymity.

"I do fear that Basel IV is doomed," a banking industry official added. There are headwinds from elsewhere, too.

Patrick McHenry, Republican vice chairman of the House financial services committee, fired a warning shot at Federal Reserve Governor Janet Yellen about the Basel talks in a letter dated Jan. 31, ahead of Trump's executive order.

The Fed must "cease" all attempts to negotiate binding standards "burdening American business" until the Trump Administration has had the opportunity to nominate officials that prioritize "America's best interests", McHenry said.

While lawmakers often call on regulators to ease pressure on firms, regulators said Trump's intervention in banking rules gives more clout to McHenry's warning.

The Basel Committee declined to comment.

GLOBAL COOPERATION

Trump's decision to review existing, post-crisis banking rules has rung alarm bells among regulators outside the country.

Mario Draghi, president of the European Central Bank, which regulates the euro zone's main lenders, said on Monday that easing banking rules could threaten financial stability.

Draghi was chairman of the Group of 20 Economies' (G20) regulatory task force, the Financial Stability Board, which during the financial crisis was instrumental in building up a global approach to reinforcing banking standards.

A former regulator said the United States would be scoring an own goal by withdrawing from multilateral bodies like Basel as it would no longer be shaping rules that impinge on U.S. banking competitiveness globally. "It's early days, but what we have seen in language and rhetoric from Washington is worrying," said David Wright, a former top EU official who was part of crisis-era efforts to create the global regulatory consensus. "If you break international consensus, you are effectively opening up a regulatory race and heaven knows where it will end," said Wright, now at Flint Global, which advises companies on regulatory matters.

Wright was referring to what was seen in the run-up to the financial crisis, when countries like Britain resorted to a "light touch" approach to banks to make London a more attractive financial center.

Valdis Dombrovskis, the EU's financial services chief, said last week that international regulatory cooperation had been vital in tackling the financial crisis and must continue.

Much will hinge on how much regulatory change Trump can actually push through.

Former Democratic Congressman Barney Frank, who jointly sponsored the Dodd Frank Act that Trump wants to review, told the BBC last week he does not expect Congress to approve the wholesale rolling back of rules, but the Trump administration could pressure U.S. regulators to ease up on applying existing requirements. Anil Kashyap, a Bank of England policymaker, said last month that Trump's nomination for the powerful role of Fed Vice Chair in charge of banking supervision would shape the U.S. approach to international rule-making.

It will have a "huge impact", a regulatory source added. The fear among global regulators is that multilateral bodies like the Basel Committee and the Financial Stability Board could be abandoned by the United States under Trump.

Jose Ignacio Goirigolzarri, chairman of Spain's Bankia, told Spanish television on Tuesday he would be concerned if Trump was questioning the usefulness of international banking rules.

"It would worry me very much because I think it's very important, very relevant that there have been advances in the homogenization of regulation amongst developed countries," he said.  

(Additional reporting by Paul Day in Madrid, editing by Giles Elgood)