LONDON (Bloomberg) - National Australia Bank Ltd., the nation's largest bank, is assessing an offer for HBOS plc.'s Australian unit, said two people with knowledge of the matter.

National Australia, which has not approached HBOS, met with advisory firms in London this month to discuss the prospects for a successful bid, said the people, who declined to be identified because the deliberations are confidential. The Perth-based unit might fetch £3.7 billion ($7.3 billion), analysts estimate.

HBOS, Britain's biggest mortgage lender, is seeking £4 billion from investors in a rights offering to replenish capital depleted by writedowns on sub-prime-infected assets and rising loan delinquencies. Potential bidders would be tapping into growth in Western Australia, where a mining boom has spurred the economy and lifted home prices over the past three years.

HBOS Australia "is probably quite attractive for an East coast Australian bank looking to diversify", said Alan Beaney, who helps manage $2 billion, including HBOS shares, as head of investments at Principal Investment Management Ltd. in Sevenoaks, England. HBOS "would have to consider offers," said Beaney.

National Australia, whose board met in London this month, has not decided whether to make an offer, and Edinburgh-based HBOS has not solicited bids, the people said. Melbourne-based National Australia is mostly interested in HBOS's Bank of Western Australia Ltd., they said.

Brandon Phillips, a spokesman at National Australia, declined to comment.

"There is speculation all the time about HBOS," CEO Andy Hornby said at a shareholders' meeting in Edinburgh to approve the rights offer. "I am not going to comment on our Australian business. It is a great business and it is performing well."

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 ($726 million) in 2007, boosted by higher deposits. Fee and commission income rose 36 percent while net interest income climbed 24 percent.

BankWest, with A$36.7 billion of deposits at the end of April, has about 121 branches in Western Australia and plans to open 160 more across the country, according to information on HBOS's Web site.

The economy of Western Australia state grew 1.4 percent in the first quarter from the previous three months, according to the Australian Bureau of Statistics, the second-fastest expansion among the country's six states.

National Australia, with a market value of $44 billion, said in May it expects takeover opportunities as banks and securities firms sell assets amid a global credit crisis.

"There are going to be lots of opportunities over the next year or two," CEO John Stewart said in an interview with the Australian Broadcasting Corp. on May 11. "As a matter of fact, they are coming thick and fast, simply because there are so many banks round the world that are damaged."

National Australia may also be under pressure to do a deal as smaller rivals Westpac Banking Corp. and St. George Bank Ltd. negotiate to form the nation's second-largest bank.

A possible St. George and Westpac merger would be Australia's largest banking takeover and create a lender with about A$500 billion of assets, trailing only National Australia. The combined company would control 25 percent of the home loan market.