Don't undermine our banks: Costello

Former Liberal treasurer Peter Costello doesn't want to see anything that would undermine the strength of Australia's banking sector, having been a great source of stability for the economy - particularly during the 2008-2009 global financial crisis.

"However you feel about banks and their service, just remember this: there is only one thing worse than a very profitable bank, that is an unprofitable bank," Mr Costello told journalists in Melbourne at a briefing of the Future Fund of which he is now chairman.

As Labor continues to pursue a royal commission into the banking system, Mr Costello warned once banks become unprofitable or challenged, then there was a real problem in the economy.

Former Labor prime minister Bob Hawke agreed the banks were a key element in the Australian economy, but still thought a royal commission into their behaviour was a "good idea".

"Enough prima facie evidence is already out in the public of behaviour which is less than ideal and they shouldn't have anything to fear," he told reporters after a book launch in Parliament House.