JP Morgan and NAB mull HBOS break-up

US investment bank JP Morgan and National Australia Bank have held talks about forming a consortium to break up British bank HBOS, the Telegraph newspaper reported on its website.

Without giving a source for its information, the report said JP Morgan had also approached private equity firms and may talk to Spanish bank Santander for a deal that would resemble the break up of ABN AMRO by a group of three banks last year.

NAB could be a buyer of HBOS's Australian arm, Bankwest, and may also be interested in the corporate banking unit, the report said.

HBOS, Britain's biggest home lender, has been hit hard by the global credit crunch and its share price has tumbled, increasing speculation it could be taken over.

It has been looking to shore up its balance sheet to help it weather conditions in a fast-deteriorating UK property market.

Earlier this month an emergency fund-raising flopped as investors took just 8.3 per cent of the shares offered, after the market price of its shares fell below the offer price of 275 pence amid worries about UK banks' prospects as the economy falters.

The Telegraph report said no consortium has been formed and talks could still fall through, while a break up bid may meet opposition from UK regulators.