Australian banks could be scrutinised after latest banking scandal

An analyst says a formal public inquiry into the sector may be on the cards.

According to CNBC, the fallout from Australia's latest banking scandal — allegations that Commonwealth Bank may have ignored money-laundering regulations — could spur serious pain for the sector.

Commonwealth Bank of Australia (CBA), the largest bank Down Under, saw its shares tumble on Friday, shedding nearly 4 percent by the close.

That followed the Australian government's financial intelligence and regulatory agency on Thursday saying it was seeking civil penalties against CBA for "serious and systemic non-compliance" with anti-money laundering laws.

"It's going to be harder and harder to resist the calls for a Royal Commission in Australia and Commonwealth Bank will have been a big contributor to that overall cynicism towards the banks," Brian Johnson, an Australia banking analyst at CLSA, told CNBC's "Street Signs" on Friday.

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