LONDON (Reuters) - Canada's Toronto-Dominion Bank
The newspaper said the Canadian bank has long coveted Citizens and has become more interested since the summer.
TD Bank and RBS both declined to comment on the report.
RBS, 82 percent owned by British taxpayers, said in February that it would sell 20-25 percent of Citizens in the next two years through an initial public offering in New York.
It is under pressure from lawmakers to focus on lending to British households and businesses, and from Britain's financial regulator to bolster its capital position.
Analysts have said that a full sale of the U.S. business could raise as much as 8 billion pounds.
Toronto-Dominion is one of a number of parties to have been linked with a takeover of the business, but Chief Executive Ed Clark dismissed the idea in February, saying that a deal would not meet his bank's stated criteria for acquisitions. ($1 = 0.6271 British pounds)
(Reporting by James Davey and Matt Scuffham; Additional reporting by Cameron French; Editing by David Goodman)