Banking and wealth options for NAB

National Australia Bank may shortly have to choose whether its acquisition priorities in Australia lie in the field of wealth insurance and thus press on with an offer for Aviva, or in banking, in which case an offer for ING Direct is the more plausible option.

While ING is dismissing speculation that its Australian banking business may be for sale, NAB and to a lesser extent ANZ may be open to buying the business, which ranks as the sixth largest with a market share of roughly five per cent.

ING Bank Australia may be worth in the order of $2.5 billion to $3 billion based on 2008 operating earnings. The last time NAB sold new capital, at least in the form of ordinary shares, was in late 2008 when it raised $3 billion and promptly allocated half to its Clydesdale Bank business in Britain.

There's more speculation in the Financial Review today on the presumed front runners to buy Aviva's Australian wealth management and platform business. The newspaper's tips remain AMP and NAB, though this time with the suggestion that any offer from NAB would be "an opportunistic offer" and talking down price expectations, which the AFR tipped to be in the order of $600 million.

The newspaper reported that due diligence on Aviva wraps up this week.

There are other banking businesses for sale at present including, however informally, that of Suncorp and also Bank of Queensland (with a Queensland Inc style merger of that pair a plausible scenario at this stage after drawn out reviews of their options by each bank).