Shares in Australia's big banks have come under heavy selling pressure as short-sellers take their toll, attracted by banks' lending vulnerability amid a two-speed economy.
National Australia Bank (NAB) led the sector lower by 1229 AEST, falling 77 cents, or 2.81 per cent, to $26.64.Westpac dropped 60 cents, or 2.64 per cent, to $22.15, ANZ Banking Group lost 61 cents, or 2.68 per cent, to $22.18, and Commonwealth Bank (CBA) had dropped 78 cents, or 1.5 per cent, to $51.39
"(The banks) have been fingered by a number of commentators as good shorts," said CMC Markets chief market strategist Michael McCarthy.
"The call is that those looking for short exposures to the Australian market have piled in to the banks around the idea of the two-speed economy."
CBA, which owns Perth-based BankWest, was less exposed to the weaker east coast states, relative to its peers, making it less of a target for traders, he said.
"Those banks that are exposed particularly to the east coast economy are likely to have real problems in loan book growth."
"So it's no surprise that Westpac is the hardest hit in that scenario, with its high proportion of lending in NSW."
Citi Index chief market analyst Peter Esho said most of the short-selling interest in the banks was from offshore traders trying to assess their vulnerabilities and make sense of Australia's relatively strong housing market.
The two key vulnerabilities for the big four were their cost of funding and exposure to offshore wholesale credit markets, and the asset class which they were lending against, he said.
"That's residential mortgages and the jury's still out on how sustainable residential prices are here," Mr Esho said.
"They are very expensive ... whether they're going to fall and by how much come down to individual views."
"Under any scenario, those (banks) that will perform better are the ones that have perhaps a larger diversity in their revenue base - have less sensitivity to a significant fall in the residential property market."
NAB is Australia's biggest business lender, with the smallest retail lending book of the big four, despite its recent retail advertising campaign.
"Westpac is the complete opposite," Mr Esho said.
The big four banks have been regarded as among the best and strongest in the world, successfully navigating through the 2008 credit crunch and the aftermath of the financial crisis.
But Mr Esho said they must now address these "genuine concerns."
"As long as the conversation is around these points, there won't be (buying) momentum in the banks."