UPDATE 2-Australia's CBA buys HBOS's BankWest for $1.5 bln

(Adds CEO, analyst comment, details)

By Mette Fraende

SYDNEY, Oct 8 (Reuters) - Commonwealth Bank of Australia (CBA.AX) has agreed to buy British bank HBOS's HBOS.L Australian unit BankWest for A$2.1 billion ($1.5 billion), below book value, to boost its market share in fast-growing Western Australia, the bank said on Wednesday.

The sale comes after HBOS's shares slid 40 percent on Tuesday, leading a broad-based sell-off in British banks, as the UK government prepared to announce a rescue package for its crippled financial sector.

"It's certainly an attractive price, indicating some distress and willingness to sell. CBA's definitely got an attractive deal," said Mark Nathan, a portfolio manager at Fortis Investment Partners.

CBA, Australia's second-largest bank, also said it had had exploratory talks with Suncorp-Metway Ltd (SUN.AX), which operates the country's sixth-biggest bank, but added that it was not currently involved in a sales process.

"It does set an indicative benchmark price for what Suncorp's worth," said Nathan.

CBA's purchase of BankWest, at 20 percent below book value, looks cheap compared to Westpac Banking Corp's (WBC.AX) takeover of St George Bank SGB.AX at 2.7 times book value.

"The Commonwealth Bank regularly reviews acquisition opportunities but rarely have we seen a quality asset such as BankWest become available on such attractive terms to us," Ralph Norris, Commonwealth's chief executive said.