European banks are stronger than their U.S. rivals, analysts say. Here's why

European banks are looking stronger and much charismatic than their U.S. counterparts connected galore metrics, according to officials and analysts speaking astatine the Institute of International Finance league successful Brussels this week, who adhd that regularisation and collaboration is inactive needed to boost maturation successful the region.

The biggest slope successful the U.S. is worthy what the apical 9 oregon 10 European banks are owed to weaker maturation and less profitability since the 2008 fiscal crisis, Ana Botín, enforcement seat of Spain's Santander Group, told CNBC astatine the lawsuit connected Tuesday.

However, the apical European banks person amended levels of recognition default swaps, a signifier of security for a company's bondholders against default, "which means that fixed income investors deliberation the hazard of our indebtedness is little than the champion banks successful the U.S.," Botín added.

The caller volatility that led to the sale of Credit Suisse to UBS was not grounds of a systemic banking crisis, she said, but alternatively mismanagement and liquidity issues astatine circumstantial banks.

"We are successful a precise beardown presumption successful presumption of capital, liquidity supervision, extortion of our customers' data. But we besides request a spot much capableness to enactment maturation truthful we tin beryllium much profitable," she said.

"What we request is simply a cardinal rethink of what bash we privation banks to beryllium successful the caller system successful a satellite that needs growth. And uncovering that equilibrium is truly important betwixt being prudent, we're not saying that we should spell backmost connected that, but besides being capable to concern growth," Botín continued, adding this would beryllium a cardinal taxable astatine the IIF's conference.

European banks are "safer, stronger, cheaper" than U.S. ones said Davide Serra, main enforcement serviceman of Algebris Investments, who stressed the higher liquidity ratio of European banks — astir 160% — versus 120% successful the U.S.

"In a way, banks successful the U.S. person been optimizing their deposit basal more. And present with the Fed [Federal Reserve] keeping higher involvement rates, radical conscionable privation to get paid connected their deposits. So they person options with wealth markets, oregon with moving currency around," helium said.

"At the aforesaid clip successful the U.S., radical are being reminded that, you know, not each banks are calved equal. And conscionable due to the fact that you person a motion called bank, you're not arsenic safe, arsenic you know, JPMorgan, oregon Morgan Stanley."

That volition pb to further consolidation successful the U.S., helium said, pursuing the series of determination slope collapses this year, with banks considered harmless benefitting.

"Overall, I deliberation the accidental is clear. For the beardown banks successful Europe and successful the U.S., with Europe much, overmuch much attractive, determination has been zero deposit outflow, zero contented ... And hence, to beryllium honest, aft 10 years of restructuring, Europe I deliberation is the spot to be."

José Manuel Campa, seat of the European Banking Authority, noted debased valuations of European banks, but said these had been improving amid wider assemblage turmoil and arsenic higher involvement rates boost their returns.

"I deliberation that arsenic involvement rates rise, if [European banks] proceed to amusement that their concern exemplary is sustainable, we should spot enhancements implicit the mean word connected those valuations arsenic well," helium said.

For Campa, immoderate further consolidation successful European banking indispensable beryllium astir creating amended banks and "go on to fostering a much integrated azygous marketplace successful the European Union truthful we tin person cross-border banking and much businesslike services to European customers."

The EU has a long-delayed program to further make its banking union, a acceptable of laws introduced successful 2014 to fortify banks, to make a common system successful deposit security and different areas. Talks are besides ongoing implicit a Capital Markets Union.

Both Botín and Campa said pushing these tricky negotiations guardant was important for the aboriginal of the sector, with Botín saying they could assistance boost European growth.

"There is 1 happening that we could bash successful Europe to person higher growth, which is securitization," she said.

Creating caller rules connected securitization, the instauration of tradeable securities from a radical of assets — which remains a contested taxable pursuing the subprime owe situation — is cardinal to the EU's projected Capital Markets Union.

"The securitization marketplace successful Europe is 6% the size of the American market. Banks are nary longer the champion holders of credit," Botín said.

"In galore cases we tin originate, we tin assistance our customers rise that superior and past spot it with different funds and different parties that are amended holders. So determination are a fig of things astir Capital Markets Union, for example, that could determination faster and assistance higher growth," Botín said.