TSB, which recently floated on the London Stock Exchange, is reportedly planning to bid for £1.4bn (€1.8bn) worth of British state-owned mortgages.
TSB is interested in acquiring the residential loan book of UK Asset Resolution, a so-called “zombie bank” that is winding down the loans of Northern Rock and Bradford & Bingley.
Both building societies were nationalised in the run-up to the 2008 financial crisis.
The British government has a 100% shareholding in UK Asset Resolution Limited, which has around 467,000 customers with £61.2bn worth of loans.
In June, UK Asset Resolution said it had begun the potential sale of a portfolio of residential mortgages but said it would only complete the transaction if the price represented value to the British taxpayer.
TSB said it would not comment on the report and UK Asset Resolution was not immediately available for comment.
According to Sky, the chief executive of TSB, Paul Pester, is interested in buying the residential loan book from UK Asset Resolution .
TSB’s majority shareholder remains Lloyds Banking Group, which is 25%-owned by the British government following a £20bn state bailout in 2008.
In June, Lloyds sold a 35% stake in TSB, valuing the business at £1.3bn.