CBA denies speculation over BankWest bid

Commonwealth Bank of Australia Ltd has denied speculation it has launched a takeover bid for BankWest.

"Commonwealth Bank is aware of recent media speculation regarding the possible acquisition of BankWest," CBA said in a statement today.

"Commonwealth Bank regularly reviews acquisition opportunities but at this time confirms we do not have any offer with HBOS plc to acquire BankWest.

The statement comes after a Fairfax report today said the bank had made an "opportunistic bid for BankWest to capitalise on the turmoil surrounding the West Australian-based group's British parent HBOS".

Last month, British bank LLoyds TSB launched an all scrip takeover for the distressed HBOS, offering 0.83 LLoyds shares for each HBOS share.

Earlier this week shares in HBOS plunged, heightening concerns the takeover deal would not go through as the value of the company was then lower than the takeover offer.

However yesterday, shares in the BankWest parent soared 27 per cent in trade in London after Britain's Prime Minister said he was confident the takeover deal would go through.

Prime Minister Gordon Brown helped to secure the STG12 billion ($A26.94 billion) takeover deal in the first place, as he suspended competition laws in order to make it possible.

Amid market speculation that the deepening crisis would prompt Lloyds to pay less, Brown stepped in to offer support for the deal.

"I am confident from talking to the leading parties on this that not only do they want to go ahead with this but they are determined to do all the work that will make this possible," said Brown in an interview with Sky News on Tuesday.

Following Brown's comments, the Edinburgh-based lender's shares gained 33 pence to 156 pence on the London Stock Exchange on Wednesday. The bank's stock had previously fallen 38 per cent in the three days through Tuesday amid market talk that Lloyds might try to change the terms of the Sept. 17 deal.

The bank's shares were also boosted Wednesday by hopes that the once-rejected US$700 billion bailout for the US financial system would soon win legislative approval on a second try, and a separate promise from Brown that the government would guarantee 50,000 pounds of each saver's deposits when a bank folds - up from the current guaranteed limit of 35,000 pounds.

The all-stock takeover deal would give HBOS shareholders 0.83 shares in Lloyds for every HBOS share held.

But the ongoing global market turmoil - which worsened Monday after US legislators rejected the initial bank bailout plan - led to HBOS' market value falling, while Lloyds' value stayed broadly flat.

As a result of the growing spread in the two companies' share prices, market analysts began predicting that the takeover deal would not go through as planned because it was representing increasingly poor value for Lloyds. As of midday on Tuesday, buying HBOS at the agreed rate would have cost Lloyds as much as 45 per cent more than the market valuation.

"Shareholders are going to want to re-negotiate the deal," said Richard Hunter, head of British equities at Hargreaves Lansdown Stockbrokers on Tuesday.

But Brown's optimism, combined with renewed hopes for a multibillion dollar US bailout, seemed to be enough to turn that view around on Wednesday.

As HBOS' share price rose 27 per cent to 156 pence, Lloyds' share price rose by 15 per cent to 261 pence - narrowing the gap between the two companies' values and making the original deal palatable once again.