NEW YORK (Dow Jones) - JPMorgan Chase & Co. is in talks to buy Bank of New York Co.'s retail-banking business, according to a person familiar with the matter.

A deal could involve up to 300 Bank of New York branches, which could fetch up to $4 billion, CNBC reported Thursday morning. Spokesmen for both banks declined to comment on the report.

The discussions haven't reached a final stage, according to the person familiar with the matter. Goldman Sachs Group Inc. (GS) is representing Bank of New York in the negotiations, while JPMorgan is being represented by its own investment bankers, this person said. A Goldman spokesman had no immediate comment.

A deal would give JPMorgan a bigger presence in the wealthier-than-average and highly competitive New York banking market and would give Bank of New York a way of shedding an underperforming unit at a time when buyers are expected to give strong valuations to retail banking networks.

Bank of New York has long been expected to sell off its retail branch network to focus on its main business of processing transactions. Those expectations heightened recently after Capital One Financial Corp. (COF) agreed to pay a rich premium to acquire New York -area banker North Fork Bancorp Inc. (NFB).

Prudential Equity Group analyst Michael Mayo wrote last week that a spinoff would be well timed and would let Bank of New York's shares trade at a higher multiple consistent with its processing business.

"The performance of the Bank of New York's retail bank has lagged, the stock value of pure-plays has increased, and Bank of New York stock has lagged," Mayo wrote. "We sense that the time is right for this move."

CNBC said a deal could be completed within two weeks. Bank of New York shares rose $1.38, or 4.0%, to $35.80 in premarket trading on Inet. JPMorgan shares, which closed Wednesday at $41.68 , hadn't traded.

Mayo estimated the value of the retail unit at $4 billion, but said it could sell for $5 billion if the buyer agreed to pay the 34% premium to deposits that Capital One paid for North Fork. That valuation was seen as very high, however, and North Fork also had a sought-after mortgage lending business.

Bank of New York's remaining processing business could be worth $26 billion , Mayo said.

The Bank of New York has 342 retail branches, with 95% of its deposits in the New York metropolitan area, Mayo said. In size, the standalone retail bank would be among the Top 10 in the New York market and 37th nationally, Mayo wrote.

As of June 2005, JPMorgan led the New York metro market with 24% of total deposits. But the bank underinvested in its branches earlier in the decade, allowing competitors like Commerce Bancorp (CBH) and Bank of America (BAC) to chip away at its dominance.

The Bank of New York was ranked fifth in the New York area, with 4.8% of deposits. The bank is the country's oldest and was brought into being under the leadership of Alexander Hamilton.