Yorkshire Building Society is in talks to acquire Norwich & Peterborough Building Society.
Virgin Money and US private equity firm JC Flowers have also been linked with the building society. JC Flowers had an approach to acquire a stake in N&P rejected in December.
An N&P spokeswoman confirms the two parties are in talks. She says: “The board has evaluated the proposals in conjunction with its advisers and confirms that it has entered into discussions with Yorkshire Building Society, which are subject to due diligence and satisfying certain conditions.”
However, she says there is no certainty the deal will go ahead.
Any deal would need the approval of both N&P’s members and the FSA.