Lloyds Banking Group is considering the sale of Scottish Widows Investment Partnership in a bid to boost capital.
The report says Deutsche Bank has been gauging interest from possible bidders but has not started a formal bidding process.
Lloyds chief executive officer Antonio Horta-Osorio is under pressure to shrink the lender following its government bailout in 2008 while the Bank of England also told lenders last month that they needed to raise £25bn of additional capital to cover bigger potential losses on commercial real estate and from the euro area as well as possible fines for misselling and stricter risk models.
Last month, Lloyds Banking Group raised £520m from institutional investors through the sale of 20 per cent of St James’s Place.
Lloyds acquired Swip’s parent company Scottish Widows for £7.3bn in 2000.
In April 2012, Swip restructured its equities desk to focus on a “lower risk approach to investment”. The move saw a number of funds closed and roles cut from the firm.
Earlier this week Swip was hit by the loss of UK fund manager James Clunie, who is joining Jupiter Asset Management.