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SYDNEY: Australia's Commonwealth Bank said Tuesday it had begun exclusive talks to buy BankWest, the local unit of Britain's HBOS, in a deal estimated at about A$2 billion (US$1.45 billion).
An HBOS spokesman confirmed the talks, which come against the background of a shake-up in the global financial sector, including a planned takeover of HBOS itself by fellow British bank Lloyds TSB.
Commonwealth Bank said in a statement that while no agreement had been reached at this stage, negotiations were continuing.
Earlier Tuesday, the Australian Financial Review said in an unsourced report that Commonwealth Bank was likely to buy BankWest for around A$2 billion, which it said was about the value of BankWest's net assets.
The proposed deal comes amid speculation that Commonwealth Bank could also buy Suncorp-Metway's banking and wealth management operations.
Among other changes on the cards in Australia's banking sector, Westpac Banking Corp. is close to completing an US$18 billion takeover of the country's fifth-largest bank, St. George Bank.
Richard Wallace, managing director of Sydney-based Wallace Funds Management, said a BankWest deal would make sense for Commonwealth Bank, Australia's largest bank by market capitalisation.
"Under normal circumstances it'd be a difficult transaction to do and (there) could be competition concerns, but at the moment there are assets for sale and we think it makes a lot of sense," Wallace said.
HBOS - Britain's biggest provider of home loans - faced collapse owing to massive write-downs caused by the US subprime home loan crisis and resulting credit crunch.
- AFP/yb
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