Banks may target HBOS's Australian business

Two of Australia’s biggest banks are understood to be circling one of Halifax Bank of Scotland’s Australian businesses, it was reported today.

Commonwealth Bank of Australia and National Australia Bank are both understood to have spoken to advisers about acquiring the retail operations of HBOS’s Bank West, according to the Sunday Times.

But the groups are reported to be reluctant to take on HBOS’s other Australian operations, meaning that a successful bid would be likely to lead to a break up of the business.

Bank West’s retail arm has 860,000 customers across Australia, with HBOS’s other operations in the country including corporate banking under the brands BOS International, Capital Finance and St Andrew’s.

Altogether HBOS’s Australian operations are thought to be valued at around £3bn.

Much of HBOS’s future growth is focused on its Irish and Australian arms, however, the group’s chief executive Andy Hornby has said there are “no sacred cows” in the business and it is continuing to review its assets.

The group is understood to have considered a sale of some or all of its Australian operations before it decided to go ahead with its recent £4bn rights issue.

Shares in HBOS, which is the UK’s biggest mortgage lender, rose by more than 3% on Friday following rumours of a possible sale of its Australian businesses.

Although neither of the banks are yet in talks with HBOS, rumours that they are interested in its Australian businesses have been circulating for several weeks.

Commonwealth recently signalled it was on the look out for businesses to buy, staying acquisition opportunities may arise from the credit crunch.

It last week bought a 33% stake in Aussie Home Loans, a privately owned mortgage broker.

HBOS declined to comment on the speculation.