Furthermore, if the large banks all have very similar business models, as they do in Australia, problems in one bank might portend problems in the others and hence a large systemic issue. If anything, the major Australian banks’ business models have become more similar over the years since the global financial crisis.
They are all now more focussed on housing lending and some are pulling back from wealth management and international operations. Finally, it could also be argued that a large bank is, by its nature, more complex and hence more difficult to supervise than a set of smaller banks.