We recognize that the differing approaches to Basel II that are being adopted by various countries may create challenges for banking organizations that operate in multiple jurisdictions. It is good to remember that cross-border banking has always raised specific challenges that supervisors from various countries have worked hard to address.
In theory, companies should be indifferent to the mix of equity and debt they use to fund themselves, since the creditors of a safer firm will lend to it at lower rates and shareholders of a safer firm will accept a lower return on their investment.