Banks pursue yields, adjusted for risk, adjusted for capital requirements.

Sir, Tom Braithwaite and Tracy Alloway report “Bank step up hunt for high yielding asset classes”, October 13. That is a very imprecise description which only feeds the ongoing confusion about what banks do. 

An ordinary citizen, with each of his dollars worth the same, would of course pursue yields adjusted for risks, but, the banks, they pursue yields, adjusted for risks, adjusted for how much capital they are required to hold… and that is not the same.