Banco Santander SA, Spain's biggest bank and the euro zone's largest bank by market value, is preparing to sell part of its rapidly expanding Mexican operations via an initial public offering, the Wall Street Journal reported Monday.

The move, which would be the largest IPO in the history of Latin America's second-largest economy, could generate between $15 billion and $20 billion, according to a person familiar with the matter.

Selling a stake in the Mexican bank, the nation's third-largest, would boost Santander's solvency as its operations in southern Europe struggle and it faces the challenge of meeting the heightened capital requirements of Basel III.

Santander recently invited investment banks to come up with proposals on how to handle a stock market listing of part of its Mexican business in the next six to 12 months. The bank is expected to evaluate the proposals for how to structure an IPO and pick an adviser.

The bank bought the 24.9 percent of the Mexican unit of Bank of America Corp. (NYSE: BAC) in June 2010 for $2.5 billion, which translates into a total value for the business of $10 billion.

This won't be the first time Santander has sold Latin American assets recently. The Madrid-based bank raised $8 billion in 2007 by selling a 15 percent stake in its Brazilian unit. It also tried an IPO for its Argentine business but canceled that move due to tough market conditions.

Market conditions for its Mexican business are good. Profit rose 46 percent last year to $1.3 billion, loan-loss provisions are falling and credit is growing at a yearly rate of about 30 percent, the Journal said.

American Depositary Receipts for Santander fell 11 cents to $6.16 in midday trading.