Analysts see GF Bital as one of two Mexican banking firms which could be bought by a foreign investors.

With almost 6 million customers, GF Bital has the largest customer base of any Mexican bank group and boasts 1,380 branches.

As such, a takeover would enhance HSBC's standing in the local market where it currently has just one branch.

Mexico's stock market regulator, the National Banking and Securities Commission, has given HSBC permission to prepare to make a formal offer for a controlling stake in GF Bital, HSBC said.

GF Bital is believed to be worth about £1bn ($1.56bn).

Rival bidder?

Spanish bank Banco Santander Central Hispano (BSCH) holds a 30% stake in GF Bital.

The bank is seen as a likely rival bidder for a controlling stake in the Mexican bank.

BSCH already owns GF Bital's rivals, Santander Mexicano and Serfin.

GF Bital's other main shareholder is Banco Commercial Portuguese.

In addition, ING of the Netherlands is due to pay $200m for a 17.5% stake.

In London, HSBC shares stood 9.5p higher at 728.5p in lunchtime trade.