It has emerged that HSBC has talked to investors about selling a stake of some 30% of its UK retail and commercial banking operation.
The move comes ahead of rule changes that will mean British banks will have to ring-fence their retail banking units from riskier investment banking. The aim is to protect depositors and taxpayers in the event of future bail-outs of the scale needed by Royal Bank of Scotland and Lloyds Banking Group in 2008.
A listing would be one way of achieving this although it would not in itself allow the bank to escape items such as the bank levy.
However, it might also achieve a greater valuation for its businesses.
If HSBC goes to the stock market with its UK business it could be competing for investors' interest with the likes of TSB, which is being spun out of Lloyds, and RBS's Williams & Glyn's as well as potentially Santander UK and Virgin Money.
The Government will also seek buyers for its stakes in Lloyds and RBS themselves.
HSBC is Europe's biggest bank with a market value of £123.5 billion and its UK arm is estimated to be worth about £20bn.
Shailesh Raikundlia, analyst at Espirito Santo said: "Such a move would crystallise a higher rating for the whole group, especially in the light of buoyant investor sentiment on the UK economy."
HSBC, which is chaired by Glaswegian Douglas Flint, moved its headquarters from Hong Kong to London with the acquisition of Midland Bank in 1992.
There has long been speculation that the group would like to relocate overseas as regulations are tightened up in Europe.
In the UK measures devised by the Independent Commission on Banking chaired by Sir John Vickers are being implemented although the changes are not due to come fully into force until 2019.
Senior figures at the bank have shown frustration with some of the changes with Mr Flint attacking European banking bonus cap plans as "highly damaging" this summer.
Gary Greenwood, analyst at Shore Capital, said: "The logic would appear to be that the business may command a higher valuation as a separately listed entity than as a wholly owned subsidiary of the group."
He added: "A more cynical view may be that this would be a first step along the road to a full UK exit and a relocation of the group's headquarters to a market where regulation is perhaps less penal for the group."
Mr Raikundlia said: "For HSBC, a carve-out of the UK business would help to deal with the requirements of the incoming Vickers rules, which demand that UK banks ring-fence their domestic retail banking operations.
"However, the rest of the group would only avoid the more onerous regulation if HSBC were to re-domicile the rest of the business to Hong Kong."
HSBC chief executive Stuart Gulliver has long stressed that Hong Kong and Britain are the bank's twin "home markets", together accounting for more than half of profits so far this year.
Banking profits in the UK have rebounded after several difficult years when the economy slowed.
Lloyds is the only listed bank almost purely focused on UK banking.
HSBC's shares closed down xxp or xx% at xxp.