"There can be no certainty that a transaction will be forthcoming. Further announcements will be made in due course," NBNK said in a statement, adding that trading in its shares would now be suspended.

The Daily Telegraph and Sky News said on Monday that NBNK's talks with NAB UK over possibly buying Yorkshire and Clydesdale banks formed part of NBNK's bigger plan to buy some 630 retail bank branches which Lloyds has been forced to sell by regulators.

A spokesman for NAB UK told Reuters on Monday that the company's priority was to grow its existing business but added "in this climate it is also only natural that we would look at other options available to us."

"This would, however, be against strict financial criteria with our key focus to generate value for our shareholders," he added.

Sources with knowledge of the matter have told Reuters that NBNK, Sun Capital Partners and The Co-Operative Group's banking arm are currently in the running for the Lloyds branches, which analysts say could fetch about 2.5 billion pounds ($4 billion).