Britain's Royal Bank of Scotland is working on a £3 billion (€4.76bn) bid for Safeway with a view to breaking up the UK's fourth biggest supermarket chain, according to two Sunday newspapers.
The Royal Bank of Scotland said it had a policy of never commenting on market speculation. But an industry source told Reuters the stories were untrue. "Linking the Royal Bank of Scotland to this deal is nonsense," the source said.
The Sunday Times and Sunday Telegraph said in unsourced reports that Britain's second biggest bank was working with Allan Leighton, the former chief executive of rival supermarket group Asda.
Leighton, who is currently chairman of Britain's state postal firm Consignia, was not immediately available for comment.
The newspapers said the Royal Bank and Leighton were planning to break up Safeway and sell its stores to other supermarkets including Asda, J Sainsbury and William Morrison.
Safeway has been repeatedly cited as a possible takeover target in recent months as its performance has fallen behind its rivals.
But the firm has said it has not had any takeover approaches so far and analysts think any bid involving rival supermarket groups would run into stiff opposition from the UK's competition authorities.