HSBC eyes £20bn spin-off of UK retail arm

Shares in HSBC soared close to 10 per cent in a matter of minutes in early trading (AFP)

Banking giant HSBC is considering a possible flotation of its British division, according to the Financial Times, citing three sources familiar with the matter.

The plan, which is at an early stage but has been presented to the board according to the FT, would involve the flotation of up to 30 per cent of HSBC's UK retail and commercial banking arm.

The business could float with an estimated market capitalisation of £20 billion.

The move would help HSBC cope with planned new rules requiring UK lenders to ring-fence their retail operations from the trading floor.

The government has warned lenders that it will "electrify the ring-fence" of retail operations if banks fail to do in a bid to prevent future cases of "Too Big to Fail".