With the Basel Committee’s injudicious regulations, it is very difficult for a bank to give credit judiciously.

Sir, Henny Sender holds that “Banks must lend more judiciously to prosper in emerging markets” April 8. Who could disagree with that? That applies of course to all markets and not only emerging markets.

But in order to do that, banks need to focus 100 percent on the borrower and not, as now, spend too much time looking at how it can structure the loan so as to be required to hold the least of equity against it.

When we read about Stan-Chart’s “commodity-related exposures” and that “much of the lending uses property as collateral” one gets the feeling that perhaps the “minimize the equity” objective might have triumphed the “know your client” criteria.

And this is but one of the should-be-expected, unexpected consequences of the Basel Committee’s injudiciously distorting credit-risk-weighted capital requirements..

@PerKurowski