Rumour: NAB wants to buy HBOS Australia

This is the latest M&A rumour making the rounds in financial circles. I caught this in Today’s Financial News.

And that may be the moment when National Australia Bank (NAB:Australia) makes a formal offer for the Australian branch of HBOS. NAB, the country’s largest bank, has already begun discussing the feasibility of an offer with advisory firms in London, but hasn’t yet approached HBOS with an offer.

HBOS Australia would be a logical expansion choice for National Australia. HBOS, headquartered in Perth, has capitalized on the mining boom in Western Australia, while National Australia is centered on the more populated east coast. And HBOS may be able to sell the subsidiary for as much as GBP 3.7 billion ($7.3 billion).

Now the question is, how much money does HBOS Australia make for its parent company, and how much is HBOS willing to sacrifice to stay afloat during the credit crisis?

As I see it, this is just a rumour. But, it is something to take note of as the UK housing market suffers and HBOS is in need of cash. We already know that Citibank is looking to shed its German operation.Ultimately, with more writedowns to come, banks should take what they can get.