Treasury head saddened by bank revelations

Treasury boss John Fraser is disappointed by what is coming out of the royal commission into the banks, saying it is sad for the country and the industry.

Treasury Secretary John Fraser says he is saddened by evidence from the banking royal commission. (AAP)

Treasury secretary John Fraser admits the revelations that are coming out of the royal commission into the banks are "sad and disappointing".

Mr Fraser, himself former head of an international Swiss investment bank, said not everything that is being heard from the commission is surprising.

"I take no joy in it whatsoever ... it is very sad, it is very sad for our country and it is very sad for the industry," he told a Senate estimates hearing on Tuesday.

He said there is a risk that there is an unanticipated tightening in financial conditions through reactions to the royal commission.

"But it is early days yet to make an informed judgment on that," Mr Fraser said.

He also noted higher short-term interest rates in the US seemed to have resulted in higher wholesale borrowing costs for Australian banks.