"It will be more robust with more capital, a lower return on capital … and much more prudent when it comes to risk management. Therefore I think they will make a much better contribution to society," Borg told AFP after delivering a lecture at the Stockholm School of Economics in Riga.
In his lecture in the Latvian capital, Borg said bank owners should be in no doubt about their responsibilities to society as well as their balance sheets.
"Bank owners should know that if they mismanage their bank it will be taken over and their capital will be wiped out," he said.
"We've seen a banking sector with too much risk, too little capital, too weak owners, too weak management that has created excessive leverage, excessive risk taking, and had profit margins that cannot be sustained in future.
"It is a business that will be changing, where the balance sheets will be cut down. This is probably one of the sectors of the European economy that will employ fewer people in the future than they have done. There has been an excessive financial sector that I think cannot be defended in terms of economic fundamentals," he said.
Europe has made progress in restoring its financial credibility, but more remains to be done, Borg added.
"The whole banking sector is going through an overhaul that will go on for a decade," he said.
"We have already set in place much tougher regulations, supervision in most countries is strengthened and we are starting to create a European supervision structure that is very important -- even if we should probably have gone two, three or even five steps further when it comes to strengthening European institutions in this regard."