THE Commonwealth Bank of Australia, the nation's biggest mortgage provider, fell in Sydney trading after it sold A$2 billion (US$1.3 billion) of stock to raise funds for its acquisition of HBOS's Australian units.

The lender slumped 6.2 percent to A$42.32 in Sydney, extending its decline this year to 28 percent, Bloomberg News said. 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 October 7 before the shares were suspended, the company said.

On Wednesday, Commonwealth agreed 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.

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, 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 has also been in talks with Suncorp-Metway Ltd, Australia's third-largest insurer.