LONDON (Reuters) - Mortgage lender Coventry Building Society is in talks over a possible takeover of its mutually-owned rival Norwich & Peterborough Building Society, the Mail on Sunday newspaper reported. In an unsourced report, the paper said Coventry is still working on a possible bid, while Britain's two biggest mutual lenders, Nationwide and Yorkshire, are also thought to have been in talks with Norwich & Peterborough (N&P). No one at Coventry or N&P could immediately be reached for comment. Coventry is Britain's third biggest building society, a financial institution owned by its members, with 18.4 billion pounds of total group assets. N&P is the ninth biggest with 4.2 billion pounds of assets, according to data from the Building Societies Association. N&P said earlier this month that it was keeping its options open after receiving approaches about a possible merger or capital injection. The 152-year old lender did not name the potential bidders. N&P's chief executive Matthew Bullock told the Sunday Times newspaper in December that the society had rejected a capital injection from JC Flowers, the U.S. buyout firm. Increased competition and funding pressures have fuelled a round of consolidation in the mutual banking sector, which accounts for a fifth of UK home loans and domestic savings.