AIG to select banks for AIA IPO by next week-source

* About four banks likely to make final cut-source

* Extensive work on IPO to begin June 22 week

* Morgan Stanley likely to be a global coordinator

By Paritosh Bansal

NEW YORK, June 9 (Reuters) - American International Group Inc (AIG.N) hopes to select about four banks by next week to lead an initial public offering of its Asian life insurance unit, a source familiar with the matter said on Tuesday.

More extensive work on the American International Assurance Co Ltd (AIA) IPO process, such as dividing up tasks among banks and prospectus writing, is expected to begin the week of June 22, the source said.

An AIG spokeswoman declined to comment. The source asked for anonymity as the selection process is private.

The 90-year-old, Hong Kong-based AIA, with more than $60 billion of assets under management, provides coverage to about 20 million customers, or close to a third of AIG's total customer base.

The IPO, anticipated to be at least $4 billion based on targets set by AIG executives, is expected in the first half of 2010 in Hong Kong. AIA and AIG would have separate boards and management teams. [ID:nN17390217]

More than 30 banks submitted proposals to be global coordinators and bookrunners for the job. About 10 are currently being interviewed, the source said.

Morgan Stanley (MS.N), which is advising the U.S. Federal Reserve on the AIG bailout, is expected to be named as one of the global coordinators for the process.

The IPO is part of a larger divestiture program by AIG, as it looks to repay U.S. taxpayers after a series of bailouts in which the federal government committed some $180 billion to AIG's rescue, including about $85 billion in loans. (Reporting by Paritosh Bansal, editing by Leslie Gevirtz) (For more M&A news and our DealZone blog, go to www.reuters.com/deals)