Troubled bank Halifax Bank of Scotland has agreed to sell its Australian banking business for £1.2 billion in a bid to boost its balance sheet.
The bank said the sale of Bank of Western Australia Ltd and St Andrew's Australia Pty Ltd would "further enhance the group's capital position and reduce the group's wholesale funding requirements".
The retail, business banking, insurance and wealth management businesses will be sold to Commonwealth Bank of Australia subject to approval by Australian regulators.
HBOS was, until recently, considered the UK's banking giant, commanding leading positions in both mortgage lending and savings markets.
HBOS has the UK's largest savings institution, holding deposits totalling £258 billion for both consumers and businesses.
The bank has a 16% share of the savings market, meaning that for every £100 saved by people in the UK, £16 is deposited with Halifax or Bank of Scotland.
However, HBOS has recently run into a series of financial problems and during the first six months of this year the group's share of net mortgage lending, which takes into account people moving their home loan to a different provider, fell to 7%, down from 15% during 2007, after it pledged to put margins before volumes.
It also revealed sharply lower profits and said it was concerned about rising bad debts as customers struggled with repayments. The interim results showed that pre-tax profits for the six months to the end of June plummeted 72% to £848 million.
At the same time it saw a 36% leap in bad debt charges to £1.31 billion, which it said could rise further as hard-pressed customers ran into problems with repayments and house prices continue to fall.
Lloyds TSB Group plc, who has tabled a £12.2 billion bid to takeover HBOS, has confirmed it is supporting the sale.
