Westpac chairman John McFarlane has warned that excessive financial regulation could hamstring the country's ability to recover from the coronavirus-triggered recession by making it more difficult for the banks to lend.

In an exclusive interview with The Australian Financial Review, Mr McFarlane said, "One of the biggest surprises in my three months at Westpac has been when I asked management 'Why can’t we do what otherwise seems sensible with respect to lending?'