Shares in Australia and New Zealand Banking Group (ASX: ANZ) continued to sell off on Wednesday despite the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) spending most of the session in positive territory.

With ANZ Bank down around 0.9% by late afternoon trade, the shares have now lost close to 12% in the past five trading days.

ANZ Bank has been the worst performer of the four major banks over this time frame and in fact it is now the worst performer amongst its peers this calendar year; a title previously held by National Australia Bank Ltd (ASX: NAB).

What’s going on?

The catalyst for the sell-off in bank stocks has been mounting fears regarding bad debt charges which Australian banks will be forced to take.

Last week ANZ Bank raised its forecast for loan losses by $100 million with management citing clients in the resource sector as the cause.

ANZ Bank’s actions have forced investors to face up to the fact that the cycle looks to be turning. Impairment charges would now appear to be in an uptrend having come through a cyclical low.

Australian banks remain amongst the most profitable in the world, so rising charges can quite easily be absorbed.

Despite this, a tightening market is expected to constrain earnings growth. For this reason, although trading on arguably attractive multiples, it may be too soon to buy the banks.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. 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.