Qatar is in talks about buying a stake in the British arm of Spanish bank Santander prior to or at the time of a planned flotation of the unit, reported the Sunday Times newspaper.
Santander is in detailed discussions with Qatar Holding, part of the Gulf state's sovereign wealth fund, among others, about the possibility of such funds becoming cornerstone investors in Santander UK, said the report.
Qatar Holdings and Santander UK were unavailable for comment when contacted by Reuters.
The Spanish lender said last year it planned to list its UK unit, which according to the report is the fifth-largest bank in Britain.
Qatar Prime Minister Sheikh Hamad bin Jassim bin Jabr al-Thani, who is also head of the sovereign wealth fund, said in February Qatar was open to buying stakes in UK lenders, having in the past reaped a significant profit from an investment in Barclays .
In 2010, Qatar bought a 5 percent stake in Santander's Brazilian arm, Banco Santander Brasil , in a deal worth $2.7 billion.