US BANKING giant JP Morgan is understood to be discussing a possible consortium bid to break up Halifax Bank of Scotland.
The American institution is said to have held talks about a possible deal for the UK's biggest mortgage lender with several parties.
A large Australian bank, thought to be the National Australia Bank (NAB), and Spain's Santander, have reportedly
been approached, and it is thought JP Morgan will also approach large private equity firms.
The Edinburgh-based bank has suffered a tricky few months, with shares hit by short-selling and a £4 billion rights issue seen as a disaster after just over eight per cent of shareholders decided to take up the offer. The poor performance of the company, which also suffered more than £1bn of writedowns in the wake of the US sub-prime mortgage collapse, has left chief executive Andy Hornby facing a great deal of pressure from shareholders.
The proposed break-up bid would be similar to the Royal Bank of Scotland-led consortium's bid for ABN Amro last year, with JP Morgan acting as advisor to the group, in the same way Merrill Lynch advised on the ABN deal.
JP Morgan may also provide some financing for the deal, although it is not thought that the US bank would want to buy any of the large constituent parts of HBoS, as it has no retail banking operations in the UK.
The institution is also still working out the details on its acquisition of stricken US bank Bear Stearns earlier this year.
Clydesdale owner NAB has been tipped as a possible buyer of HBoS's Australian division BankWest, and may also be interested in its corporate banking arm, which makes up most of the Bank of Scotland business.
The link would make sense as NAB, led by former Woolwich chief executive John Stewart, held takeover talks with the Bank of Scotland in 2001, before the eventual deal with Halifax.
The HBoS asset management arm Insight and its insurance and investment business Clerical Medical have also been highlighted as areas which could be split.
Shares in HBoS soared 16 per cent earlier this week after rumours circulated that Spanish banking giant BBVA was preparing a takeover bid, but the rumours are now thought to be wide of the mark.
City sources suggested that the consortium talks were in the early stages, and could still easily fall through.
No-one from JP Morgan, NAB or HBoS has commented on the speculation.
The talk came as RBS said it was close to agreeing the sale of its stake in Tesco Personal Finance back to the supermarket.
It is thought RBS is hoping to make up to £1bn from the deal, which is said to be on-track for completion in next few days. The Edinburgh-based bank is trying to shore-up its balance sheet by selling assets, but has struggled to find buyers for its insurance firms.
The full article contains 496 words and appears in Edinburgh Evening News newspaper.
