Oct. 2 (Bloomberg) -- Commonwealth Bank of Australia, the nation's biggest provider of mortgages, denied a report it's bidding for HBOS Plc's Australian unit BankWest.

Commonwealth does not have an offer for HBOS's Perth-based unit ``at this time,'' the Sydney-based bank said in a statement, following a report in the Australian Financial Review that it made a A$3 billion ($2.4 billion) offer.

The report fueled speculation that Commonwealth is planning a takeover of BankWest to fend off a threat to its dominance of Australia's mortgage lending market from Westpac Banking Corp., which is poised to catapult itself into first place with its planned takeover of St. George Bank Ltd.

National Australia Bank Ltd., the country's biggest bank by assets, and Australia & New Zealand Banking Group Ltd., the fourth-largest by market value, also talked to HBOS about buying the unit, the newspaper said, without saying where it got the information. A purchase would help banks tap economic growth in the resource-rich Western Australia state.

HBOS, which agreed to be bought by Lloyds TSB Group Plc for about $20 billion, held informal talks with Commonwealth and National Australia to sell its Australian units for A$5 billion to A$7 billion, three people familiar with the plan said last month.

BankWest had about A$36.7 billion of deposits as of Sept. 5. The company has about 121 branches in Western Australia, a state that produces a third of the world's traded iron ore and 75 percent of the nation's gold, and plans to open 160 more across the country, according to HBOS's Web site.

HBOS Australia, which has more than 6,000 employees at units including BankWest, Capital Finance Australia Ltd. and St. Andrew's Australia, posted a 15 percent increase in pretax profit to A$757 million in 2007. Fee and commission income rose 36 percent while net interest income climbed 24 percent.

Commonwealth's shares gained 1.5 percent to A$45.53 as of 10:25 a.m. in Sydney, paring their decline this year to 23 percent.

To contact the reporter for this story: Stuart Kelly in Sydney skelly22@bloomberg.net

Last Updated: October 1, 2008 20:41 EDT