SYDNEY • Australia's four largest banks are scrapping cash withdrawal fees for all domestic users as they try to salvage their reputations amid rising pressure for tougher laws after a series of scandals.

Commonwealth Bank of Australia, the nation's biggest lender, said on Sunday it would immediately remove the A$2 (S$2.15) fee it charged customers of other banks to use its 3,400 automated teller machines (ATMs). Westpac Banking and National Australia Bank followed hours later, while Australia & New Zealand Banking Group said it would halt the charge from early next month.

Following the move, Treasurer Scott Morrison said on Sunday "it's important that we continue to take action now right across the full suite of issues that are needed to ensure that our banking is fair, it is stronger, is more accountable and is more competitive".

Commonwealth Bank is embroiled in allegations it repeatedly breached anti-money laundering laws and is facing a civil case and two regulatory probes.

The rest of the industry is also under pressure and has been trying to head off calls by opposition lawmakers for a wide-ranging inquiry into the sector, and fight back against the government's decision to hit them with a A$6.2 billion levy over the next four years. The government is also pressing ahead with legislation to hold bank executives to "heightened standards of behaviour" and require senior executives to defer a proportion of their pay.

Australians made 259 million withdrawals from ATMs of banks other than their own last year, according to Reserve Bank of Australia data. At A$2 a withdrawal, that equates to about A$520 million in fees charged to customers.

BLOOMBERG