The cosseted Australian banks have been hit with a series of unexpected blows following the country's latest budget announcement.

After recently reporting good results, the four largest Australian banks, The Commonwealth Bank of Australia, (CBA) Westpac, (WP) National Australia Bank (NAB) and Australia and New Zealand Banking Corporation (ANZ) have had the smiles wiped off their collective faces.

The Australian Government has hit them with a new $6.2 billion Australian dollars levy. The Government will raise the money from the biggest banks over the next four years by imposing a 6 basis-points levy on liabilities over $100 billion Australian dollars, Treasurer Scott Morrison said in the budget announcement. 

Accountability 

But the punitive levy was only a part of the new parameters the Government seeks to impose on the banks, which it feels are designed to rein in bad bank behaviour.

Banks will also face new rules and penalties for their most senior executives and a dedicated team to regulate them at the country's regulator the Australian Competition and Consumer Commission (ASIC). 

All senior bank executives will have to be registered with banking regulator Australian Prudential Regulation Authority (APRA)  and if found in breach of a yet to be set up «Banking Executive Accountability Regime» they can be deregistered and disqualified from holding executive positions, and stripped of their significant bonuses.

Suitability For The Role

Banks will also be required to advise APRA prior to making senior appointments and penalties will be imposed on banks that don't monitor the suitability of their executives to hold senior positions.

There are also more hefty fines for bank bad behaviour starting at $50 million Australian dollars for small banks and $200 million Australian dollars for large banks.

Stability Under Threat

Bank executives are said to be furious the Government had not given any warning to the banks and that most had learned of it through leaks to the media.

Responding to the new measures the Australian Bankers' Association chief executive Anna Bligh said that «the levy was introduced without any consultation with the banks, and the measures could threaten the stability of the financial system.