By 12.01pm (AEDT), the benchmark S&P/ASX200 was 18.9 points lower at 3419.9, while the broader All Ordinaries had lost 17.8 points at 3366.3.
On the Sydney Futures Exchange, the March share price index contract was 22 points lower at 3374 on a volume of 14,197 contracts.
Aequs Securities institutional dealer Ric Klusman said recent institutional placements by Suncorp, Qantas, Westfield and Newcrest mining were draining cash from the market.
"The banks are getting belted," he said.
"The market is looking pretty terrible from the point of view that all the cash is being sucked out.
"No one can afford to buy stock because they're getting pounded by so many placements."
ANZ dropped 65 cents, or 4.89 per cent, to $12.63 by 12.05pm (AEDT), Commonwealth Bank shed 68 cents to $28.50, National Australia Bank lost 83 cents to $18.62 and Westpac gave up 55 cents to $15.92.
Suncorp Metway said it expects interim profit to be between $250 million and $270 million after being hit with significantly higher bad debt charges, as the bank and insurer announced that chief executive John Mulcahy would step down.
Shares in Suncorp entered a trading halt pending a capital raising, last trading at $7.13.
Shares in Macquarie Group gained more than four per cent after the investment firm said writedowns would be less in the second-half compared with the first.
At noon, Macquarie had gained 81 cents, or 3.46 per cent, to $23.68 after it said profit for fiscal 2009 would fall to about $900 million from the previous year.
Macquarie reduced staff by about 1000 in the four months to January 31.
Shares higher as banks gain
Large banks take beating on Wall Street
