HSBC Holdings has hired US investment bank Lazard Ltd to sell its French retail business, a source close to the matter told Reuters, as part of a plan by new interim chief executive Noel Quinn to reduce costs across the banking group.

HSBC, Europe's biggest bank by assets, has carried out a strategic review of the French retail business, which has around 270 branches and employs up to 3,000 staff out of 8,000 in France overall.

The business could be worth about 1 billion euros ($1.1 billion), analysts and bankers estimated.

An auction process was expected to kick off in the coming weeks, when confidential information packages would be circulated to potential buyers to undertake due diligence checks on the business, the source said.

Lazard declined to comment.

Quinn, who became interim CEO in August after the bank announced the surprise departure of John Flint, has between six to 12 months from that date to make his case for the permanent role, so he is expected to move quickly to try and improve HSBC returns, which have been hit by an economic slowdown in China.

The French sale is complicated by a general fall in profitability for retail banking among European banks, as low interest rates have constrained returns, banking sources said.

Lazard was expected to sound out French banks, including BNP Paribas, Credit Mutuel and Societe Generale, these sources said, adding that talks would be tough as local banks were in no rush to bulk up their local presence.

HSBC, which makes most of its profits in Asia, said in August it would be laying off about 4,000 people this year.

Its business outlook has deteriorated due to an escalation of the trade war between China and the United States, an easing monetary policy cycle, unrest in its key Hong Kong market and Britain's plan to leave the European Union.

HSBC has been present in France, its biggest hub in continental Europe, since 2000 when it bought Credit Commerciale de France (CCF) for about 11 billion euros.