UPDATE 1-Siam City Bank stake bid deadline Feb 1 - sources

* Central bank unit is selling a 47.58 percent stake

* Thanachart, backed by Canada's Scotiabank, tipped to win

* Thanachart, allies said by sources to already own 20 pct (Adds details, quotes)

By Arada Kultawanich

BANGKOK, Jan 21 (Reuters) - The deadline for bids to buy a stake in Thailand's seventh-largest lender, Siam City Bank SCIB.BK, has been extended to Feb. 1 from Jan. 25, two financial sources close to the deal said on Thursday.

The Financial Institutions Development Fund (FIDF), a unit of the central bank, is in the process of selling its 47.58 percent stake. Officials were not immediately available for comment.

"February 1 is the final date for proposing the bid price," one of the sources, who declined to be named, told Reuters, giving no explanation for the new date.

The deal is expected to be completed in the first quarter.

Thanachart Bank, 49 percent owned by Canada's Bank of Nova Scotia (Scotiabank) (BNS.TO) and 50.9 percent by Thailand's Thanachart Capital TCAP.BK, is seen as the frontrunner for the stake, which could cost around $900 million.

HSBC (HSBA.L) (0005.HK) is also said to be planning a bid and state-owned Korea Development Bank has expressed an interest. [ID:nTOE60H001]

"The chances of Thanachart winning are 60-70 percent, depending on the bid price," one banker said.

Canada's third-largest lender and Thanachart plus subsidiaries already own about 20 percent of Siam City, having bought up stock on the bourse, banking sources said.

The sources said they started accumulating the stock before the FIDF, advised by UBS (UBSN.VX) and Tisco Securities TISCO.BK, announced last September it wanted to sell its stake, held since the 1997-98 Asian financial crisis.

Thanachart has prepared a 40 billion baht ($1.2 billion) rights issue to secure the funding for the deal if it wins the bidding.

Scotiabank could merge Siam City Bank SCIB.BK with Thanachart to form Thailand's fifth-biggest bank with about 830 billion baht in assets, moving ahead of Bank of Ayudhya BAY.BK, which had assets of 762 billion baht as of December.

Siam City operates 420 branches nationwide with 7,047 employees, focusing on corporate and retail banking. Thanachart Bank is the country's top lender for car loans.

Analysts expect the FIDF to accept a price at 1.5 times Siam City's book value, or about 30 baht a share, a 3.45 percent premium over the closing price on Wednesday.

Siam City Bank was the top performer on the Bangkok bourse in 2009 with a gain of 315 percent but it has moved little this year, with the stake sale already factored in.

At 0839 GMT, the shares were unchanged at 29 baht, while the main Thai stock index .SETI was 1.3 percent lower. ($1=32.94 Baht) (Editing by Alan Raybould)