CBA in talks to buy UK-based HBOS' Australian arm

Commonwealth Bank of Australia (CBA) is in talks to buy the Australian subsidiary of UK-based troubled HBOS, BankWest, for about $1.44 billion, a media report said.

Commonwealth Bank of Australia is in exclusive talks to buy BankWest, in a deal valuing the unit at about AUD 2 billion ($1.44 billion).

The Commonwealth Bank of Australia in a statement has said, "Whilst discussions are continuing (with HBOS), the parties have not reached agreement."

The potential deal underlines the shake-up taking place in the Australian banking sector, which has four major banks that have AA rating.

"Australia's four largest banks - Commonwealth Bank of Australia (CBA), ANZ, National Australia Bank and Westpac are all AA-rated, which has helped in their endeavours to mop up less highly-rated rivals," the daily said.

Besides, the Commonwealth Bank of Australia and ANZ are also said to be interested in buying the sixth-ranked Australian Bank that is owned by Suncorp-Metway, the diversified Australian financial services group, Financial Times said.

"The Australian banks negotiating hand, and its ability to enter talks with BankWest at a price equating to little more than net assets, is likely to have been strengthened in recent days as HBOS shares nose-dived on the London stock market," the FT said.

Meanwhile, HBOS is in the process of being sold to the UKs Lloyds TSB. Earlier last month, the British banking major Lloyds TSB had announced that it has reached an agreement for acquiring UK's troubled mortgage lender HBOS for a consideration of 12.2 billion pound.