Spanish bank Sabadell, which bought TSB last month, could make a bid for the £13.2bn mortgage portfolio held by nationalised banks Bradford & Bingley and Northern Rock.
Sabadell is understood to be one of several potential bidders interested in the assets, although Spanish reports that a deal will happen are thought to be highly speculative.
The portfolio was put up for sale by UK Asset Resolution, which is charged with winding down the assets of the two bailed-out UK lenders.
UKAR was set up by the Government after it rescued Bradford & Bingley and Northern Rock at the height of the financial crisis.
Interested parties could bid for all, or parts, of the mortgage portfolio.
Both Sabadell and UKAR declined to comment.
Spanish newspaper Expansion said Sabadell is the favourite to win the bid for the assets. Other possible bidders could include Royal Bank of Scotland, Citi, Goldman Sachs and Blackstone.
The mortgage portfolio includes performing and non-performing mortgages and could be sold for as little as £400m because the loans are seen as such a mixed bag.
UKAR’s chief executive Richard Banks said in June that the sale of the £13.2bn portfolio is expected to complete in 2016.
“We’ve completed the first round of bids and received a number that is sufficient to go to a second round,” he said at the time.
“We are evaluating the bids. It’s a bit like selling a house – the highest bid may not be the best bid as they may not be able to complete.”
It was understood that UKAR would move to a second round with a smaller number of bidders by the end of July, but it declined to comment on Monday on whether this had happened.
It doesn’t anticipate completing before the end of this year because the deal will be complex and could face legal hurdles.
Catalonia-based Sabadell closed its takeover of TSB bank for £1.7bn in mid-August.