By BLOOMBERG

FRANKFURT • The heads of the European Central Bank (ECB) and Deutsche Bank AG called on governments to complete the integration of the euro-area’s banking union, saying it’s needed to strengthen the financial system and combat competition from the US and Asia.

“Progress in completing the banking union — namely, first harmonising options and discretions, completing resolution, and laying the groundwork for the creation of an effective deposit insurance — is essential,” ECB president Mario Draghi said in Paris. “I am confident that significant steps in this direction will soon be taken.”

A decade after the global financial crisis and a sovereign-debt crisis that almost tore the single currency apart, work on a single banking framework remains incomplete.

Stumbling blocks include agreement on a common deposit insurance, which nations such as Germany fear would leave them on the hook to underwrite weaker lenders in southern economies.

Deutsche Bank CEO Christian Sewing (picture), speaking at the Bloomberg European Capital Markets Forum in Milan, said banking union is a precondition for consolidation among European lenders, and that failure to create a fully fledged framework undermines the ability to match up against peers globally.

“If you really want to have a competitive edge” versus the Americas and Asia, “we must complete the banking union,” he said. “We need one single standard.”

Draghi also focused on the need for banks to speed up disposal of their bad loans, and said European banks need to shrink their hard-to-value investments if they want feel comfortable enough to merge.

At the same time, he returned to a persistent ECB theme — the need for governments to push through the structural reforms that ensure healthy economic growth. Without that, he suggested, banking union will struggle.

“Let’s keep in mind that fragmentation starts with the decision by banks not to operate in regions where the risk-return of lending is judged to be insufficient to remunerate their invested capital,” he said.

“Ultimately, what ensures a steady flow of bank lending to the economy, even in times of unforeseen stress or disruption, is a growth-friendly environment, which can only be assured by the appropriate government policies.”