Bendigo and Adelaide managing director Mike Hirst has told shareholders a royal commission into the banking industry would be "a significant waste of taxpayer and shareholder money".
Mr Hirst said 14 parliamentary inquiries into banks, the David Murray-led financial system inquiry, and three unsuccessful class actions against banks had failed to uncover any systemic wrongdoing.
"It is very hard to see what substantive, tangible matters a royal commission would actually investigate. In my view, it would be a significant waste of taxpayer and shareholder money," Mr Hirst told the bank's annual general meeting in Bendigo on Tuesday.
"We agree that there are some issues within the industry that should be addressed, but the most effective solution is the one in place: that banks and regulators will work even more closely to deal with the concerns that have been raised, while independently appointed parties will make sure banks are delivering."
Bendigo has largely avoided the criticisms of the big four that led to Labor-led calls for a royal commission.
Mr Hirst resisted any temptation to capitalise on Bendigo's record during the AGM, despite remarking that the banking giants had benefited from government guarantees during the global financial crisis in a way that Bendigo had not.
Mr Hirst acknowledged what he referred to as "community angst" over bank conduct, but agreed with the opinion expressed by the big four CEOs during their appearances before parliamentary hearings in October that much recent scrutiny stemmed from a basic misunderstanding about how they operate.
He echoed Commonwealth Bank, ANZ, National Australia Bank and Westpac by pointing out that banks don't always pass on the whole of a Reserve Bank rate cut to mortgage customers because they fund the loans by borrowing at a different rate.
Banks earn a margin by charging borrowers more than they pay depositors to mitigate risk, cover the cost of running the bank and provide a return to the shareholders who provide capital.
"If banks don't do that profitably, then there are no other institutions who will take on the credit, liquidity, interest rate and operational risk that allows depositors to earn an income securely and borrowers to buy houses and run businesses," Mr Hirst said.
"People simply won't be able to borrow as banks won't attract the capital required to manage the risk of doing so or the deposits to allow them to lend."
Banks have each agreed to appoint a customer advocate to help give aggrieved consumers a voice.
Westpac on Tuesday said it had hired Adrian Ahern, the former global chairman of law firm Norton Rose Fullbright, for the role.
