* HSBC considering floating up to 30 pct of UK business -FT
* HSBC UK boss tells staff report is "speculation"
* Bank structures under review ahead of UK reforms due in2019
* Shares drift 0.2 pct
By Steve Slater
LONDON, Dec 9 (Reuters) - HSBC played down a reporton Monday that it was considering listing a third of its Britishretail and commercial banking arm in order to meet UK regulationand unlock value for shareholders.
The Financial Times on Monday said HSBC was consideringselling 30 percent of its UK arm. It said the plan was at anearly stage but the matter had been discussed with investors andinformally at board level, citing three people familiar with theproject.
HSBC declined to officially comment, but Antonio Simoes, thehead of its UK bank, said in a message to staff: "We understandthis could be unsettling for employees and want to confirm thatthis is speculation and nothing more."
The note reiterated that Hong Kong and Britain were HSBC'stwin "home markets" and together typically account for 40-50percent of annual profits. It said given recent "encouraginggrowth forecasts" for Britain "it would be unusual to consider aflotation of 30 percent of the business" when the bank wouldbenefit more with its 100 percent ownership.
British banks will have to ring-fence their retail bankingunits from riskier investment banking under rules designed tocome into force in 2019 to give more protection to depositorsand taxpayers should any more bailouts be needed. A listingcould be a logical move to meet that requirement, some analystsand bankers said.
Shares in the bank were down 0.2 percent 657.8 pence,underperforming a slightly firmer Europe banking index.
HSBC is Europe's biggest bank with a market value of $200billion and its UK arm is estimated to be worth about 20 billionpounds ($32.7 billion).
Analysts said spinning off the UK business could crystalisea higher valuation for the group, but it was unclear how big theregulatory or strategic benefits would be.
"This is a broader industry discussion and in the end thiswill depend on the final legislation, but at this stage we areunsure of the merits of such a move. In terms of time frame, itis still an extended and protracted process," said Amit Goel,analyst at Credit Suisse.
If HSBC listed its UK arm it would partially reverse itstakeover of UK bank Midland more than 20 years ago, whichresulted in it moving its stock market listing to London fromHong Kong.
There is frequent speculation the bank could move itsheadquarters back to Asia, and spinning off a separate UKlisting may make that prospect more likely, analysts said.
HSBC, which is structured as a collection of country basedsubsidiaries, has been cleaning up its structure and sellingminority holdings as part of a far reaching restructuring byChief Executive Stuart Gulliver since the start of 2011.
Investors could be attracted by a new listing to rivalLloyds Banking Group, which is currently seen as theonly listed bank almost purely focused on UK banking.
But that space is set to get more crowded with other UKbanks earmarked to list in the coming years, including TSB andWilliams & Glyn's - which are respectively being spun out fromLloyds and Royal Bank of Scotland - Santander UK, Virgin Money and other smaller lenders.
HSBC Holdings (HSBA)