Britain's audit regulator said it was considering a probe into how KPMG checked the books of HBOS, the UK bank that had to be rescued with taxpayer money in the financial crisis.

"We don't currently have it under investigation but we are monitoring the situation quite closely with everything that is going on at the moment, and then we will take a decision whether or not to start an investigation," an FRC spokeswoman said.

KPMG said it stands by the quality of its work at HBOS, which is now part of Lloyds Banking Group .

UK shareholder advisory group Pirc said in a letter to the Financial Times on Wednesday there should be an independent investigation into how KPMG audited HBOS in the run up to the bank's collapse.

(Reporting by Huw Jones, editing by Matt Scuffham)