Challenger bank CYBG today confirmed that it has engaged in talks with Royal Bank of Scotland over the possibility of buying Williams & Glyn.
RBS was instructed to sell the business as part of its £45bn state bailout deal, and was set a deadline of the end of 2017 - a date the bank warned it was likely to miss in April.
The group had been considering an IPO or a sale but then entered into talks with Santander and received a bid, but the Spanish-owned bank later called off the deal citing price issues.
CYBG this morning gave an official response to press speculation that it was moving in on the 307-branch strong Williams & Glyn, and said that, while it "recognises it has a duty to continually evaluate all potential opportunities to enhance its business, it will only evaluate combinations that are in line with the company's strategic objectives".
The challenger said it has made a "preliminary non-binding proposal to RBS in relation to its Williams and Glyn operations".
"This engagement is ongoing and there can be no certainty that any transaction will occur, nor as to the terms on which any transaction might be concluded," the company added.
"A transaction will only be pursued if it is determined by the board to be in the best interests of CYBG shareholders."
RBS shares were down one per cent in early trading, while CYBG's stock dipped by 1.2 per cent.