Australia's four biggest lenders on Monday launched a strongly worded attack on the government's new levy on big banks, estimating almost A$1 billion (US$745.00 million) in additional annual costs between them.
Westpac expects to take a $260 million annual cost hit as a result of the government's bank levy, the lender told investors on Monday.
"Foreign banks were first encouraged into the Australian market, for very good reasons, by Paul Keating in order to ensure that we had increased competition in the banking system".
Westpac is the first of Australia's big banks to unveil the impact of the government's new bank levy - and its not pretty. "No company can simply "absorb" a new tax, so consideration is being given to how we will manage this significant impost".
In an letter to shareholders, Australia's biggest bank says it had limited information on which to base its calculations.
This included the likes of AMP, Bank of Queensland and Bendigo and Adelaide Bank.
"To dimension the impact of the Levy for our shareholders, the $260 million after tax cost is equivalent to around 8 cents per share (using the above estimates)". It's also worth noting that although the central bank is technically independent, it can not act as a lender of last resort unless the market has total faith in the government that underwrites it.
The Prime Minister believes Australia would have lost its triple-A credit rating without new revenue measures such as the bank levy in his government's second budget.
He said that still held and no foreign bank operating in Australia "is a major bank in Australia".
But it left untouched the ratings of Australia's five biggest banks, including Macquarie Bank. However, dividend payments may be a little more skinnier in the future: Westpac says the new levy is equal to around 4.3% of their 2016 full year dividends of AUD1.88 a share.
"The exact cost will depend on the final form of the new legislation passed and the composition of Westpac's liabilities", the bank says. On an annualised basis, that represents a cost of around $370 million or around $260 million after tax.
CBA said it had expressed serious concerns that the levy was a poorly designed policy which would impact not just the banks, but its customers and shareholders.
Global rivals would not be subject to the levy, although HSBC is subject to the equivalent United Kingdom scheme.