Hedge funds have upped their bets that big bank share prices are set to fall, as the weakening dollar takes a toll on foreign investors who had piled into the sector.
With global markets taking an increasingly dim view towards Australia's economy in recent weeks, the proportion of investors with "short" positions against the big four has also risen from long-term lows.
The move is likely to represent a souring view of bank stocks among foreign investors and a response to the sharp fall in the dollar - which erodes the foreign currency value of Australian shares.
It also follows warnings that hedge funds were eyeing banks for potential points of weakness in recent months, amid warnings of a "bank bubble".
In May, when Commonwealth Bank and Westpac shares hit record highs, the proportion of big bank shares being sold short had fallen to their lowest levels in several years.
Since then, however, Australian bank share prices have fallen and global sentiment towards the economy has deteriorated, reflected in the dollar's slide towards US90¢.
At the same time, there have been growing signs short-sellers - those betting on falling share prices - are eyeing the big four.
The banks most exposed to the trend are those with the biggest mortgage books - Commonwealth Bank and Westpac.
On the register of Westpac - the most heavily shorted big bank - short positions have risen from 0.47 per cent of its shares on issue to 0.97 per cent, according to figures from the Australian Securities and Investments Commission.
Short positions against Commonwealth Bank have also risen to 0.7 per cent of shares, up from 0.47 per cent, while ANZ's short positions have risen to 0.49 per cent and NAB's are 0.38 per cent.
While short positions against the banks are still well below the peaks reached in late 2011, when there were fears of a housing bubble, the trend comes as the falling currency eats into the value of foreign shareholdings in Australia.
A UBS report earlier this week said Australian banks had been among the world's worst-performing investments when measured in US dollars since US bond yields started rising in early May, with share price losses of 17.5 per cent.
"The biggest underperformers have been Brazil ... Australia, India and China. At a sector level autos, general retail and diversified financials have been the winners, mining and bond proxies (property and utilities) the losers," UBS said.
Despite the increase in short positions, banks remain far less popular with short-sellers than cyclical stocks such JB Hi-Fi, the most heavily shorted stock on the market, with 16.87 per cent of its shares being sold short.
Short-selling was thrust into the global spotlight during the global financial crisis, when ASIC banned the practice amid a global crackdown in September 2008.
CLSA analyst Brian Johnson said in April he sensed global hedge funds were concerned Australian bank valuations were "stretched", but could not find a trigger for a fall so were not yet shorting the banks.