The Royal Bank of Scotland’s (RBS) private equity arm has expressed an interest in acquiring up-for-sale retailer Dreams.

The struggling beds retailer, put up for sale in December, has attracted interest from RBS Equity Finance, the private equity division of the bank, which is also a lender to the retailer.

However, sources close to the company claim the group’s existing lenders injecting more funding is still an option, the Sunday Express reported.

Dreams failed to secure £20m of refinancing in December from either its lending banks RBS and Barclays or private equity owner Exponent, which bought the company from founder Mike Clare for £220m in 2008.

Clare is understood to also be interested in the business as part of a consortium including DFS chairman Lord Kirkham and Carpetright chairman Lord Harris.

Ernst & Young is conducting the sale process of the retailer, which has debts of around £40m.

A source said: “One of the options is a sale, but the idea of existing investors putting more money into the firm is still very much on the table.

“The banks have had a lot of interest from people, so they are carrying out a valuation process to sound out prospective buyers.”