July 23 (Bloomberg) -- Commonwealth Bank of Australia said it's in talks with Royal Bank of Scotland Group Plc to buy ABN Amro Holding NV's investment banking and corporate finance business in Australia and New Zealand, a day after National Australia Bank Ltd. ended discussions.

The proposal is incomplete and talks are ongoing, Australia's largest bank by market value said in a statement to the nation's stock exchange. Sydney-based Commonwealth Bank is in exclusive negotiations, it said.

The sale by RBS, the U.K.'s second-biggest bank, is part of a push to shed assets and raise capital to bolster reserves depleted by credit-related writedowns and the ABN Amro purchase last year. RBS, which also wants to sell its insurance unit, must raise about 4 billion pounds ($8 billion) in disposals even after amassing 12.3 billion pounds in Europe's biggest rights offering last month, to help bring capital ratios in line with peers.

``It's an avenue for CBA to bulk up their financial side of the business, not a strategic necessity,'' said Angus Gluskie, who helps oversee the equivalent of $500 million at White Funds Management in Sydney, including shares of Commonwealth Bank and National Australia Bank.

Commonwealth Acquisitions

The acquisition would be the first for Commonwealth Bank since teaming with JPMorgan Chase & Co. to buy United Utilities Plc's power distribution unit in December. Commonwealth Bank bought 83 percent of Indonesia's PT Bank Arta Niaga Kencana in January 2007, according to data compiled by Bloomberg.

Commonwealth Bank rose 3.7 percent to A$44.60 at the close of trading in Sydney, trailing the 5.5 percent gain in the S&P/ASX 200 Finance Index. The bank's shares have declined 25 percent this year.

National Australia Bank, the country's biggest by assets, said yesterday it ended talks to buy ABN Amro's local investment- banking businesses, without providing further details.

A sale of the units could fetch as much as A$450 million ($436 million), Wilson HTM analyst Brett Le Mesurier said earlier this month. The units advised on 11 Australian deals valued at $5.1 billion over the past year and have a 7.9 percent market share of equity underwritings in Australia and New Zealand, Bloomberg data show.

RBS, which sold its train-leasing unit for 3.6 billion pounds to a group led by Babcock & Brown Ltd. last month, wants about 7.5 billion pounds for its insurance unit. Allstate Corp., the largest publicly traded U.S. home and auto insurer, Travelers Cos. and Germany's Allianz SE may still be interested in buying the division after Zurich Financial Services AG pulled out of the auction earlier this month.

To contact the reporter on this story: Iain Wilson at iwilson2@bloomberg.net

Last Updated: July 23, 2008 02:46 EDT