Britain's 7th-largest lender, TSB, which recently floated on the stock market, is planning to bid for 1.4 billion pounds worth of state-owned mortgages, Sky news reported on its website on Saturday, without citing its sources.
TSB is interested in acquiring the residential loan book of UK Asset Resolution (UKAR), a so-called zombie bank that is winding down the loans of Northern Rock and Bradford & Bingley.
Both were two of Britain's customer-owned "building societies" which were nationalised in the run-up to the 2008 financial crisis.
The British government has a 100-percent shareholding in UKAR Limited, which supports around 467,000 customers with 61.2 billion pounds ($104.6 billion) worth of loans.
In June, UKAR said it had begun the potential sale of a portfolio of residential mortgages but said it would only complete the transaction if the price represented value to the taxpayer.
TSB said it would not comment on Saturday's report and UKAR was not immediately available for comment when contacted by Reuters.
According to Sky, which did not cite its sources, the Chief Executive of TSB Paul Pester is interested in buying the residential loan book from UKAR.
TSB's majority shareholder remains Lloyds Banking Group , which is 25 percent-owned by the government following a 20-billion-pound state bailout in 2008.
In June, Lloyds sold a 35 percent stake in TSB, valuing the business at 1.3 billion pounds.
Lloyds was ordered to sell the 631 TSB branches by European regulators by the end of 2015 as a condition of the bailout, and initially planned to sell one quarter of the business.
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