AMP has long been the focus of bid speculation

NAB paid 206m Australian dollars (�84m; $134m) for a 5.4% stake in AMP, confirming long-standing rumours that the firm was the subject of acquisition interest.

AMP's shares, which have been volatile all week, soared by one-quarter on the news.

But AMP's UK businesses, which include Pearl, NPI and London Life, remain a stumbling block for any potential merger.

Underperformance in the UK, a market that AMP spent billions of dollars trying to penetrate, pushed the firm into a A$2.2bn loss in the first six months of the year.

Back in shape

Peter Costello, Australia's Treasurer, said he would look kindly on any application to buy more than 15% of AMP.

Normally, government permission is needed to buy more than 15% of any Australian finance house.

The government is keen to put AMP back on a sound financial footing, as the group's UK woes have caused jitters among savers and investors in Australia.

AMP has already announced plans to demerge its UK arm by the end of this year.

Ups and downs

AMP's shares have lost more than two-thirds of their value in the past year.

But its Australasian business, less vulnerable to the falling stock markets that undermined its UK fund management businesses, has remained robust.

NAB, currently rich in cash, has long been tipped as the most likely buyer for AMP.