By Stuart Kelly Oct. 9 (Bloomberg) -- Commonwealth Bank of Australia, the nation's biggest mortgage provider, fell in Sydney trading after it sold A$2 billion ($1.3 billion) of stock to raise funds for its acquisition of HBOS Plc's Australian units. The lender slumped 6.2 percent to A$42.32 as at 3:12 p.m. in Sydney, extending its decline this year to 28 percent. It earlier dropped as much as 13 percent, a record. Commonwealth sold 52.6 million new shares at A$38 apiece, a 16 percent discount to its closing price on Oct. 7 before the shares were suspended, the company said in a statement. Commonwealth agreed yesterday to buy BankWest, a lender focused on Western Australia state, and St. Andrew's, an insurer and asset manager, from Edinburgh-based HBOS for A$2.1 billion as the troubled U.K. bank sells assets amid the global credit crisis. Analysts at Merrill Lynch & Co. and ABN Amro NV had forecast Commonwealth would pay as much as A$4 billion for the units. ``There has been a massive re-pricing of financial assets in the credit crisis, and this sale is one example of it as Commonwealth adjusts to difficult times,'' said Jamie Spiteri, head dealer at Shaw Stockbroking Ltd. in Sydney. ``Commonwealth wanted BankWest and realized they had to sell shares at a discount to get the cash. The stock was halted yesterday so today's move is also a matter of catching up with the market.'' Sydney-based Commonwealth, with the second-highest credit rating at Moody's Investors Service, is taking advantage of financial-market turmoil that's forcing European banks to sell assets to stay afloat. West Australia Push The acquisitions expand Commonwealth's presence in Western Australia, the nation's fastest-growing state. The deal also allows the bank to maintain its lead in the Australian mortgage market, which is under threat from Westpac Banking Corp.'s planned purchase of St. George Bank Ltd. HBOS, which is being bought by Lloyds TSB Group Plc, sold the Australian units for 0.8 times book value, less than half the average valuation in the past nine Australian bank deals, Commonwealth said. Commonwealth Bank said yesterday it's been in talks with Suncorp-Metway Ltd., without providing further details. Suncorp, Australia's third-largest insurer, yesterday said it's had approaches from potential buyers of its banking and wealth management units, without identifying candidates. Suncorp, which owns the nation's sixth-largest bank, fell 1.1 percent to A$10. It has dropped 41 percent this year. To contact the reporter for this story: Stuart Kelly in Sydney skelly22@bloomberg.net

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