The new rules that will be imposed on banks to ensure a crisis like the one that started in 2007 will not be repeated are necessary, but they will take time to implement, Unicredit CEO Alessandro Profumo told CNBC at a banking conference in Frankfurt.
Bankers are eagerly awaiting details on the new "Basel III" rules and some critics said that raising the amount of capital that banks will need to set aside would mean they will lend less to households and businesses, prolonging the economic downturn.
"Clearly the banking sector has a reputational problem. Reputation and regulation work hand in hand," Profumo said.
But the Unicredit CEO added he hoped the authorities would clearly define the amount of capital to be raised, as well the timeframe in which this needed to be done.
"Having said that...if there is a request for an incredible amount of capital in the short run…the only way in order to achieve high capital in a short time would be deleverage. I don't think it's something we can do."
Unicredit economists do not expect a double dip, but Profumo said he was worried about the long-term prospects of growth in Europe, because the US and Asia have fewer demographic problems.
"Usually growth is based on demography, on innovation and on debt and on the quality of the decision-making processes," he said.
Negotiations for the Basel III rules are still underway, but European Central Bank Governing Council member and Bundesbank head Axel Weber said the talks could be wrapped up by Sunday, Reuters reported.