If the deal were to conclude, Paragon would be able to offer its customers savings accounts.
However, Paragon says the deal is far from being completed.
In a statement to the London Stock Exchange this morning, it says: “The Paragon Group of Companies Plc notes the recent press speculation and confirms that it is in the early stages of considering the acquisition of Hampshire Trust Plc, a wholly owned subsidiary of National Counties Building Society.
“There is no certainty that a transaction will be concluded. Paragon will update the market when it is appropriate to do so.”
Hampshire Trust, which was established in 1977, offers bridging loans, development finance and various deposit accounts and savings bonds.
At the end of November, Paragon Group of Companies reported a £95.5m pre-tax profit for the year ending 30 September 2012, up from £80.8m a year earlier.
Paragon withdrew from new lending in February 2008 after the wholesale markets on which it was reliant upon for funding closed. It returned to lending in September 2010.
In September, the buy-to-let lender secured a second £200m warehouse facility with Lloyds Bank to be used alongside the existing £200m facility from Macquarie Bank, which was increased to £250m on 5 November. Currently, Paragon’s only method of funding is by renewing these facilities by securitising its loan book.
Buy To Let Funding Services principal Geoff Laird says: “It is an excellent strategic move. By gaining a banking licence it can draw funding from deposits and is therefore less vulnerable to the idiosyncrasies of the money markets.”