Royal Bank of Scotland's (RBS) potential sale of Williams & Glyn to challenger Clydesdale & Yorkshire Bank (CYBG) has sparked the attention of the banking watchdog.
RBS was told to divest of Williams & Glyn, and its network of more than 300 branches, by 2017 as part of its £45bn state bailout deal. CYBG revealed it was in talks to possibly snap up the bank last month.
Now, The Sunday Telegraph has reported the Prudential Regulation Authority (PRA) is appointing investment bankers to advise on whether integrating Williams & Glyn's computer systems could wobble the challenger bank.
Offloading Williams & Glyn has been a a tricky journey for RBS. Efforts to sell to Santander in 2012, which were nicknamed Project Rainbow, fell through because of IT problems, and, earlier this year, another bid from the bank collapsed over concerns on the price.
RBS had once aimed to spin off and float Williams & Glyn, but revealed that plan had been scrapped in its interim results in August. The bank also warned in its most recent quarterly results that it was unlikely it could divest of Williams & Glyn by the 2017 deadline it had been given.
RBS reported a loss of £469m for its third quarter of 2016, as litigation and restructuring costs of nearly £900m took their toll.
The PRA, RBS and CYBG all declined to comment.