Yikes! The Australia and New Zealand Banking Group (ASX: ANZ) share price is down 36% in 12 months.

ANZ Bank shareholders look away now!

Source: Google Finance

Source: Google Finance

Of course, no one could have predicted such a swift fall in share price of what was Australia’s third-largest bank. It’s now the fourth-largest by market capitalisation, having fallen behind National Australia Bank Ltd. (ASX: NAB).

It all started with the Chinese share market jitters last year, then concerns over Asia’s massive debt pile emerged. Risks associated with a slowing economy subsequently became a focal point for ANZ. Then, APRA’s decision to force Australia’s biggest banks – including ANZ Bank – to raise more capital to shore up their balance sheets diluted share ownership for the most part.

As a hypothetical example, if you have a $100 billion company with 100 billion shares, each share is worth $1. But if you ‘issue’ another 10 billion, the price quickly falls towards 91 cents (especially when we consider the extra capital raised isn’t producing a superb return for shareholders).

Most recently, ANZ Bank signalled higher credit charges following the downturn in the resources and energy sectors. Bank shares, like their profits, generally move in cycles.

It’s worth noting ANZ Bank’s peers won’t be immune from this, either. Indeed, if history is anything to go by it’ll be a matter of time before the other banks like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and NAB follow suit.

Foolish takeaway

There’s nothing wrong with owning bank shares in your portfolio. However, it’s vital to ensure you’re not overexposed to the banking and property sectors (remember your house and/or other property investments are likely exposed to both as well). It’s also important to diversify your nest egg across borders.

Nobody knows for sure if the worst is over for ANZ Bank. However, personally, I'd rather look for other - faster growing - dividend shares to add to my portfolio, such as the one The Motley Fool's expert analysts hand-picked as their best dividend share idea for 2016.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest.

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.