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 country's sovereign wealth fund, among others, about the possibility of such funds becoming cornerstone investors in Santander UK, said the report.

Santander declined to comment when contacted by Reuters, while Qatar Holdings and Santander UK were unavailable for comment.

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. - Reuters