Proposals to change the capital requirements for banks will widen the competitive gap between large and small banks rather than reduce it, a submission from four New Zealand-owned banks has warned.

Kiwibank, TSB Bank, The Co-operative Bank and SBS Bank have joined together to submit to the Reserve Bank's proposals and said while they supported in principle the banking industry's submission there were "some matters of specific relevance to the group".

Submissions closed on Friday on the RBNZ's proposals which include a near doubling of the minimum common equity banks should hold from 8.5 per cent currently to 16 per