Royal Bank of Scotland's £1.1billion auction of its retail and commercial banking businesses in Asia hotted up today as bidding frontrunner Australia and New Zealand Banking Group said it will raise A$2.5billion (£1.2billion) through a share placing.

ANZ - Australia's fourth-largest lender - has emerged as the most likely bidder for the businesses in China, India, Taiwan, Indonesia and other countries in the region.

It said today that the fund raising would "create further financial flexibility to pursue strategic and organic growth opportunities." But it added that it could not comment on the timing or likelihood of a deal with RBS. HSBC and Standard Chartered were also short-listed as possible buyers of the assets which RBS acquired as part of its disastrous takeover of Dutch bank ABN Amro which ultimately led to the UK Government's taking a 70% stake in RBS.

Trading in ANZ shares was suspended this morning ahead of the Australian stock market opening.

The bank said the share placing would be at A$14.40 compared with Tuesday's closing price of A$15.57.

Final bids for the RBS Asian businesses are expected to be tabled before the end of this month.

Morgan Stanley is advising RBS on the deal and Credit Suisse has been hired by ANZ.