Royal Bank of Scotland has rejected a bid from private equity group JC Flowers for 315 of its branches, according to a report in the Financial Times.
Virgin Money and JC Flowers have both recently been linked with bids for the branches following the collapse of a proposed £1.65bn deal with Santander in October over concerns about the completion date and integration complications. The bank is likely to face penalties from the European Commission if the sale is not completed by the end of the year,
The sale of the branches was mandated by the European Commission as part of conditions for its approval of state aid for the bank in 2009.
RBS chairman Sir Philip Hampton warned investors earlier this month of the need to close more branches as well as make further job cuts.
The bank went on to announce it would cut 1,400 jobs from its Edinburgh and London head offices over the next two years in a bid to improve its financial performance.
Since the height of the financial crisis, RBS has axed 37,000 jobs.