Commonwealth retaliated with claim that NAB performed dismally and foregone opportunity when mortgage market boomed.
National Australia Bank has returned fire at its Sydney rivals.
It says an unhealthy skew in big-bank balance sheets towards unproductive home lending is hurting the nation's future.
NAB deputy chief executive Michael Ullmer maintained the rage on Friday, after Commonwealth Bank boss Ralph Norris said on Thursday it was "rubbish" for NAB to argue that Commonwealth and Westpac were neglecting the business sector.
Mr Ullmer told an Australian British Chamber of Commerce lunch in Melbourne there was $600 in business credit for every $1000 in home lending -- a transformation from parity only a decade ago. "The point we are raising is whether that is a sustainable model, or do we need to consider the consequences of an under-supply of finance to the business sector and the effect that may have on the economy," he said in answer to a question from The Weekend Australian.
"At the moment, the marginal wholesale funding dollar raised by the banks in New York, London or Frankfurt is being used to finance someone's beach house in Australia.
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