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Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email email@example.com to buy additional rights or use this link to reference the article - www.ft.com... Sir, With all the benefits that Basel III will bring in terms of making the banking industry better capitalised and lowering the risk of another meltdown, it could also bring other unintended consequences (“Basel III break for banks in EU”, May 27). Drastically changing the basic banking business model is one potential outcome. For example, it will virtually eliminate large corporate deposits as part of the capital requirement, since banks will not be able to count these kinds of deposits that usually leave the bank early in the morning and are not available to them. As a result, Basel III has the potential of significantly increasing the cost of capital, forcing banks to find more expensive sources to make up for this. The scale of this is vast – in the hundreds of billions of dollars – and has the potential to compel banks to rethink their pricing models and customer acquisition strategies. No doubt this increase in cost will be passed to customers through new charges. This aspect of Basel III seems to be attacking an area of the bank that performed well during the crisis and does not need much fixing.
The US has yet fully to implement Basel II. “As you may recall, we implemented Basel II already in 2006,” Mr Barnier wrote. "It is essential to respect the deadlines agreed last year."