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HSBC UK spin-off will have to join the queue

HSBC logo is displayed outside a branch of in the United Kingdom.
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The mooted spin-off of HSBC's U.K. retail banking arm could be one of a number of U.K. bank fundraisings next year as banks try to second-guess regulators.

Other banks considering similar moves include RBS, which is planning to spin out its Williams and Glyn's unit, and Lloyds, which has already rebranded some of its U.K. high street branches TSB in preparation for an IPO of the business next year.

With smaller retail lenders Virgin Money, Metro, One Savings Bank also making noises about coming to the market and Santander talking about separating its U.K. operations from the main Spanish parent, there are questions over how much investor appetite there is for such deals.

New legislation being debated in the U.K. is likely to lead to tougher capital requirements and the so-called "ring-fencing" of U.K. retail banking operations to make sure ordinary savers are insulated from the riskier investment side of the banks' business.

A HSBC spokeswoman declined to comment on whether it is planning a £20 billion initial public offering (IPO) for its U.K. retail business, as reported in the Financial Times Monday morning. Yet analysts told CNBC the move would be plausible.

"There's a queue forming," Mike Trippitt, banks analyst at Numis, told CNBC.

"There's still genuine investor demand for good quality businesses. The real question is around regulation, and that could hold investors back."

British politicians are still debating the U.K. Banking Reform Bill, which should come into force next year. One of the key parts of the bill is the ring-fence between retail banking and the rest of the banks' business, which it is hoped will mean banks are no longer "too big to fail." Another is raised capital requirements. The legislation comes after the U.K. taxpayer had to bail out RBS and Lloyds following the credit crisis, because of worries about the effect on the U.K. economy if they collapsed.

(Read more: Banks hit with$2.3 billion rate-rigging fine)

After a better-than-expected economic recovery in the U.K., its retail banks look a safer investment than back in 2008. The sale of part of the U.K. government's stake in Lloyds earlier this year indicated that there is a market for similar offerings.

Yet the U.K.'s economic recovery is still far from barnstorming, particularly outside London, which may make investors more cautious.

(Read more: UK economy goes from 'zero to hero' but don't expect giveaway)

"The performance of the UK economy has been overly dependent upon the consumer," Alan Capper, head of credit strategy at Lloyds Bank, warned.

"Consumers' perceptions of their job prospects have fallen slightly and their interest rate expectations are rising. This raises questions about the long term sustainability of the recovery."

- By CNBC's Catherine Boyle, follow her on Twitter @cboylecnbc