Well, a couple of things.1/ The banks generally spend a shedload...

Well, a couple of things.

1/ The banks generally spend a shedload of money on man-hours researching the fundamentals of different stocks. Their withdrawl from their Standar LVR approved securities list means that they have enough concerns about a crucial aspect of the business so as not to lend against it in its own right.

Think of it as a bit like looking at the list of loan products at a bank.
eg
Home Loan 7%
Margin Loan 9%
Car Loan 11%
Personal Loan 12%

The banks make a calculated risk assessment of the loan, and price it accordingly. They now think that AIO is not a viable security to loan on. The fact that they have kept it as part of the diversified LVR approved securities keeps the door open slightly.