The Big Four ASX bank shares are currently in the red amid news of a potentially costly change the government is considering.
The S&P/ASX 200 Index (ASX: XJO) is flat right now, whereas the Commonwealth Bank of Australia (ASX: CBA) share price is down 1.4%, the Westpac Banking Corp (ASX: WBC) share price is flat, the ANZ Group Holdings Ltd (ASX: ANZ) share price is down 0.7%, and the National Australia Bank Ltd (ASX: NAB) share price is down 0.7%.
What could explain the decline of the ASX bank shares?
A Treasury report has proposed that Australian banks would have to meet a minimum presence in regional areas or contribute funding to support the number of branches and ATMs of other institutions, according to reporting by The Guardian.
Increased focus on regional banking access
Treasury has reportedly put forward two proposals that could lead to an increase of branches and ATMs in regional areas.
One idea is that banks could have a baseline of minimum services and expenditure that's expected, according to their service level and market size, according to The Guardian. If that baseline can't be met, the banks could help fund services of other banks.
Another idea is that if banks don't meet those minimum obligations, they could purchase 'credits' that other banks have earned by providing the required level of services.
It was reported that other than NAB, the Big Four ASX bank shares and digital banks wouldn't meet the baseline. They would need to provide funding under the suggested model, which could cost some banks tens of millions of dollars, like CBA and Macquarie Group Ltd (ASX: MQG).
The Guardian reported the second option would include a mandatory bank branch closure code to ensure communities can still access services, and the bank should consider the impact of closures.
A government spokesperson told Guardian Australia:
We're always looking for ways to ease pressure on people and it's no secret that the decline of banking services in rural and regional areas is a challenge for many Australians.
The Treasury regularly engages with banks on important issues like this, and it would be unusual if they weren't having discussions about the future of regional banking.
One of the problems is that a bank closure can have a notable economic impact on regional areas, according to the Treasury report, which means detrimental impacts were "not limited to customers of the particular branch."
A huge majority of banking interactions are now done online or through a mobile app, according to the Australian Banking Association (ABA). However, older Australians, people with a disability and First Nations communities are much more reliant on in-person services.
The Guardian noted that Australian Prudential Regulation Authority figures show a 36% decline in the number of branches in regional and remote areas between June 2017 and June 2024.
The closure of these branches has put more pressure on Australia Post locations, according to the Treasury report. But, the Bank@Post service is "not sufficient on its own to support access to in-person banking services and provides a more limited suite of banking services."
Foolish takeaway
Time will tell whether any new rules are implemented and how much it would cost the Big Four ASX bank shares. But, investors may be thinking it could be expensive for the large players.
