$10 billion was cut from the market value of Australia's big four banks in just 30 minutes today

Photo: Rodrigo Arangua / AFP / Getty Images

Australia’s major banks, which look likely to take some pain in the federal budget due to be handed down tonight, lost about $10 billion in combined market value in the first 30 minutes of trade today.

A short while ago, the four lenders — ANZ, CBA, NAB and Westpac — were down at least 1.6 % on Tuesday with Westpac leading the way. The broader index was down just 0.6%.

ANZ and NAB lost over $1.5 billion each of their market capitalization while Westpac ceded $2.8 billion and CBA gave up $3.8 billion.

The banks have lost between 4% and 10% percent this month as investors also sifted through earnings details and were disappointed by falling margins and revenue.

The banks look like they will end up on the losing side of the budget tonight with one strategist from the ruling coalition saying “the banks will be furious.”

Treasurer Scott Morrison announced yesterday that he had asked the Productivity Commission to review competition in the banking sector, warning there should “be no denying that there has been an increased consolidation of the position of the major banks.”

Then last night Sky News Business reported on plans to impose a levy on institutional inter-bank lending between the big four.

“Shareholders are likely to be unconcerned about whether the tax is classified as a guarantee fee or an impost on lending to big companies only,” Ric Spooner, chief market analyst at CMC Markets said. “However, it is described it will represent an additional tax or fee and the market is likely to be nervous about this prospect until they get details of what might be involved and what capacity of banks might have to pass this cost on to customers.”

The four major banks have just posted a combined interim profit of $15.6 billion, but there have been warnings that the operating environment for them is starting to look more challenging.

They already face the prospect of holding more regulatory capital as the banking watchdog moves to ringfence them from a potential housing implosion. The banking regulator has also introduced more curbs to slow mortgages that may be encourage speculation in the housing market. Added to that competition for deposits and lending is fast eroding margins.

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