The board of UK bank HBOS is due to decide this week whether to bid against Spanish bank Santander for local rival Abbey National, newspapers said on Sunday, but HBOS declined to comment.
The Sunday Telegraph quoted colleagues of HBOS Chief Executive James Crosby as saying the decision on a possible challenge to the agreed bid from Banco Santander Central Hispano was "on a knife edge."
A board meeting is tentatively scheduled late in the week and if it goes ahead an offer could be made a week from Monday, The Observer newspaper said.
Three newspapers put a possible HBOS bid value at 10 billion pounds ($17.93 billion), compared with the Santander offer which was worth around 8.6 billion pounds on Friday.
Abbey's shares last traded on Friday at 610-1/4 pence, around five percent above the 580.39 pence a share value of Santander's largely paper offer when SCH shares were trading at 8.28 euros.
Abbey is expected to post the Santander bid document to investors late next week.
The Sunday Telegraph said the HBOS board decision would depend on its lawyers' analysis of whether its take-over could be blocked by Britain's Competition Commission.
The Financial Times said on Saturday the proximity of HBOS branches to Abbey outlets could trigger the commission's concern.
An HBOS board meeting due last Thursday was cancelled because not enough preparatory work had been done to debate a bid, The Sunday Times said.
Under the terms of the Santander offer counter-bidders would have until Abbey's extraordinary general meeting - expected in October - to state their intention to table an offer.
Santander is using a scheme of arrangement rather than a simple offer document to bid for Abbey, because under a scheme it would win 100 percent ownership of Abbey once 75 percent of Abbey shareholders approved the bid, whereas a normal offer could require 90-percent approval.