Virgin Money is said to have initiated contact with Royal Bank of Scotland (RBS) about the takeover of more than 300 branches from the bank, according to the BBC.
On Friday, a deal with Santander fell through after the Spanish bank said the process was taking too long, sparking fears that RBS shares would fall on Monday, but the stock was trading down just 0.8%.
The sale of the business was mandated by the European Commission in 2009 as a condition of its approval of state aid provided to RBS as part of the £45 billion recapitalisation by the British government. Santander agreed to the purchase in August 2010.
Santander's withdrawal from the purchase left RBS looking around for a new buyer, but the BBC reported that Virgin was "very interested" in striking a deal. Virgin was among a number of bidders who lost out to Santander when the RBS business first came up for sale in 2010.
Earlier this year, Virgin expanded its high street presence when it took over and rebranded 75 Northern Rock branches.
RBS chief executive Stephen Hester said of Santander's decision to terminate the deal: 'Much of the heavy lifting associated with a transfer has already been completed, including separating data for 1.8 million customers and putting in place a stand-alone management team.
"It is of course disappointing that Santander decided to pull out of this transaction, especially for the customers and staff involved. However, RBS's strong progress in our restructuring plans means we can continue to provide a stable home for this business and its customers pending a further resolution."
This article was written for our sister website Interactive Investor