Clydesdale has put in a bid to snap up Royal Bank of Scotland's Williams & Glyn outfit.
RBS has been told to divest of its interest in the brand and its 300-strong branch network by the end of 2017 to comply with the terms of its £45bn state bailout deal, but there have been several concerns, including those raised by RBS itself, it will not make this deadline.
The Financial Times today reported Clydesdale had put forward a formal bid.
Although it was reported earlier this year Santander was interested in making a purchase, it later emerged it had walked away from the negotiating table because of quibbles over the price.
This was the second time Santander had expressed an interest in Williams & Glyn, after plans to snap in up in 2012 fell through due to IT complications.
RBS is due to report its third quarter results on Friday, and many investors will be expecting an update on how the bank is progressing in offloading Williams & Glyn.
In its interim results earlier this year, RBS said it was engaged in "positive discussions with a number of interested parties" regarding a sale of the unit, but also noted it had scrapped plans for a possible IPO for the challenger.
RBS' share price rose on the news of Cyldesdale's interest, and is currently trading up 2.1 per cent at 192p. Meanwhile, shares in Clydesdale, which listed earlier this year, are down 1.5 per cent at 271.8p.
Clydesdale said it would not comment on market speculation.
We continue to explore options in meeting our obligations to the European Commission. We have been clear that there is interest in the business and this remains the case.