In this paper we argue that asymmetry of information is crucial to explain why Equity and Debt are not just substitutes in the balance sheet of a bank: the uncertainty in evaluating its Assets is reflected in the market by a number of banks whose Market to Book Ratios are well below 100%. In order to face such uncertainty the bondholder requires, when facing new Debt issuance, an Equity buffer capable of preserving the value of the Debt from a drop in the Assets value.If the Equity of the bank is not well sized for the volatility of the Assets, then Debt issuance is not welcomed by the market, as the current financial crisis testifies. Debt then prices yields proper of Equity, a phenomenon which we will refer to as 'Equityzation of Debt'.On the contrary, if banks stabilize in their market share, then their Assets are meant to grow proportionally with GDP and so are their liabilities. A Steady State for a bank is a combination of Profit, Debt and Equity whereby the Debt issuance is proportional to GDP growth and Equity grows fueled by Profits net of dividends. Such Equity growth, obtained through endogenous Profit generation, and not through Rights issuance, preserves the composition of shareholders and ultimately the stability of Management.One conclusion is that optimal capital structure would not lead to set a level of Equity equal to the minimum set by regulators. The optimal level of Equity depends on the volatility of the Assets and minimizes the volatility of the Debt, so that new issuance of the latter may take place with a pricing consistent with long term Profits, in the sense of the Steady State mentioned above. Optimal level of Equity is then associated with optimal leverage, as one of the factor to control volatility of the Assets.In the second part of this paper we present empirical evidence of Debt Equityzation and we aim at proposing a measure of the latter obtained from market data.This paper represents a strong departure form the current state of the literature and provides a unifying frame to give theoretical and empirical explanations to phenomena such as:• Deleverage• Rights Issuance• Prevalent covered bond issuance as opposed to Senior unsecured issuance• Redesign of subordinated Debt.