MADRID (Reuters) – Banks in Europe need more dynamic regulation to enable them to improve their profitability and catch up with their peers in the United States, the head of European Banking Federation (EBF), Ana Botin, said on Thursday.

The U.S. banks are often more profitable and valued than the European counterparts. The European banking sector is fragmented and has taken longer to recover from problems resulting from the financial crisis of a decade back.

Good regulation will lead to growth and high standards. Botin stated that if we fail to balance the scales, it will be difficult for us all to invest in Europe’s economy. This was Botin speaking at the European Banking Summit.

The European banking capital buffers are much more difficult than those in America, which allows banks to more readily capitalise upon the 300 million-strong U.S. market.

Although the European Central Bank (ECB), became the sole supervisor of the major banks within the Euro zone, Europe’s banking system is still fragmented in terms of serving its customers. Cross-border transfer of deposits is prohibited,

A full-scale banking union is still in progress, as well as an agreement for a common deposit insurance program.

Botin, also Executive Chairman of Spain’s Santander (MC):, second largest lender in eurozone market value, stated that European banks would be helped by a speedier implementation of regulation.

Botin explained that profitability is the most important line of defense. He also stated that there must be more progress made in European bank market integration.

She stated that overall, it is important to ask why our profitability is lower than the banks of the United States. There, new rules can be adapted faster, capital markets are more advanced, and there’s a larger single market.

Botin said that the “truly European single market for bank is essential, and eliminating all exit barriers to cross-border commerce.

Santander Chairman also stated that banks must be able compete with non-European lenders and businesses “acting as banks”.