If the corporate regulator decides on Monday to sue National Australia Bank for allegedly manipulating the bank bill swap rate, it will add another piece of fuel to the fire flaring around Australia's banks, as the left side of politics insists a royal commission is the way to deal with their alleged transgressions.

The Australian Securities and Investments Commission remains keen to settle its cases against ANZ Banking Group and Westpac Banking Corp for allegedly manipulating the bank bill swap rate (BBSW). It is understood that its chairman, Greg Medcraft, had lunch with the Westpac board last month to encourage them to throw in the towel. At least for now, both Westpac and ANZ remain determined to fight as they maintain their traders have broken no law.