Toronto-Dominion Bank is thinking of making a play for Royal Bank of Scotland’s Citizens Financial Group, according to a report published Sunday.

The Canadian bank is considering a bid of about $12.8 billion for Citizens, according to a report published in the Sunday Times, which did not cite a source for the news. TD has been looking at a possible deal for RBS’ American retail arm since summer, the report said.

In February, RBS, which is majority owned by U. K. taxpayers, said it would sell 20% to 25% of Citizens in a public offering over the next two years. That news sparked speculation that RBS would consider selling the whole operation if it got a strong enough offer.

TD was seen as one of the likely suitors, but executives from TD and RBS have downplayed such speculation in recent months.

Toronto-Dominion Chief Executive Ed Clark in February said the company is not planning to buy Citizens. Last month Bruce Van Saun, the CEO of Citizens, said his company is not considering a sale and is still planning a partial public offering. Citizens is currently making a hiring push in advance of the offering.

"We believe TD has long been interested in this franchise" and that acquiring Citizens could be beneficial, but "there are still many hurdles to clear," Brian Klock of Keefe, Bruyette & Woods wrote in a research note Monday.

A deal at 100% of tangible book value could boost TD's earnings per share and its capital levels, but the Federal Reserve's increased scrutiny of foreign bank holding companies and the need to get the Canadian finance minister's approval present challenges, Klock wrote. It's also unclear whether RBS wants to sell right now, he wrote.

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