* BPI in talks with group headed by Lucio Tan for PNB
* Deal may involve share swap giving Tan 20 pct of BPI
* Ayala would become single-biggest shareholder of PNB (Updates share price, adds background, analyst comment)
MANILA, Nov 22 Shares of the Bank of the Philippine Islands (BPI) and rival Philippine National Bank PNB climbed on Thursday after the banks said they were discussing the possibility of BPI acquiring a stake in PNB.
BPI, the country's third-largest bank by assets, said it was in talks with a group headed by businessman Lucio Tan, the country's second-richest man, to acquire Tan's stake in PNB, which currently totals about 60 percent. The deal may create the country's biggest lender by assets, outpacing current top bank, BDO Unibank Inc.
PNB, in a separate statement, confirmed the talks, adding there was "no other matter that would require disclosure."
The talks between the banks involve a share swap that would give the Lucio Tan group a 20 percent stake in BPI, while the Ayala Corp, which controls BPI, would become the single-largest shareholder of PNB, banking sources close to the two groups told Reuters.
The deal was discussed by the PNB board at a meeting on Wednesday, but could not be voted on for lack of quorum, one of the banking sources said.
Local newspapers have reported the two groups may strike a deal valuing PNB at 96 pesos per share, a premium over the bank's current share price. There was no immediate confirmation from PNB on this valuation.
BPI shares jumped as much as 7.4 percent and PNB shares rose as much as 6.1 percent in early trading, pushing the financial sector sub-index up 2.4 percent.
BPI shares later pared gains while PNB fell as much 4 percent. Both stocks hit fresh record highs in early trade.
The transaction makes sense for the Tan group, which has been cleaning up its portfolio as Lucio Tan prepares to take a backseat and let his children and trusted managers handle his tobacco, airline, brewery and liquor businesses, analysts said.
PNB is itself in the middle of a consolidation, as it has yet to fully incorporate the operations of sister firm Allied Banking Corp. That merger was approved by the central bank in August. (Reporting by Rosemarie Francisco; Editing by Matt Driskill)