Investors sold down the major banks after the ANZ went into a trading halt and announced a $3 billion capital raising.
Westpac lost 3% to $33.43, the Commonwealth Bank 3.4% to $84.40 and the NAB 2.45% to $33.50.
The market as a whole was losing ground fast as it headed to the close, with the S&P ASX 200 at 5,608.80, down 1.15%.
ANZ says the capital raising from institutions and retail shareholders will allow it to more quickly and efficiently accommodate additional capital requirements announced by APRA.
The bank cited the increase in average credit risk weights for major bank Australian mortgage portfolios to 25% taking effect from July next year.