The Federal Government made an announcement to withdraw its banking guarantee, which is cited to be a sign of the firmness of Australia's major banks; however, it has also propelled concerns about competition in the sector.

Deutsche quoted the regional banks could find it harder to raise term funding without access to the guarantee.

The wholesale funding guarantee emerged in late 2008 after the fall of Lehman Brothers triggered fears of a global financial meltdown.

Banks were able to borrow using the Government's triple-A credit rating to source more than $160 billion from credit markets that were more often than not frozen in fear and suspicion.

The Treasurer, Wayne Swan, "It supported credit unions, it supported building societies, and it supported the second tier banks as well", he said.

Currently the giant four banks, namely the ANZ, NAB, Westpac and the Commonwealth have initiated raising money without the guarantee, posing regulators in a situation to close the scheme at the end of March.

However, second tier banks poses to be in a less comfortable posture and reveal that without the guarantee they will be paying a greater risk margin than their major competitors.