La Banque Postale SA, the banking unit of French postal service company La Poste SA, is evaluating a potential bid for HSBC Holdings PLC's retail operations in France as part of its diversification plans, Reuters reported, citing sources with knowledge of the matter.

La Banque Postale is understood to be conducting preliminary work with Barclays PLC ahead of an auction process that is scheduled to launch in 2020, the sources said. A number of French banks are expected to take part in the auction, according to the Dec. 18 report.

In October, HSBC mandated U.S. investment bank Lazard Ltd. to launch a sale process for the French retail unit as part of CEO Noel Quinn's plan to reduce costs across the group.

Meanwhile, La Poste's merger with insurance group CNP Assurances SA is expected to be completed in 2020, and one of the sources noted that the deal should not prevent La Banque Postale from engaging in another transformational transaction.