UPDATE 1-Coal miner SUEK picks five banks for IPO -sources

* Citi, Credit Suisse, VTB, RenCap and BoA Merrill-sources

* Likely to float 10 pct to raise about $1 bln - source

* IPO expected in early June - source

By Daisy Ku and Olga Popova

LONDON/MOSCOW, Jan 21 (Reuters) - SUEK, Russia's top steam coal producer, has picked five investment banks to handle a London initial public offering (IPO) in the second quarter, people familiar with the matter said on Thursday.

SUEK, controlled by tycoons Andrei Melnichenko and Sergei Popov, is likely to float about 10 percent of its share capital to raise around $1 billion, with about $750 million in new shares, one person said.

Another person said the IPO was likely to come in early June.

Citigroup (C.N), Credit Suisse (CSGN.VX), VTB (VTBR.MM), Renaissance Capital and Bank of America Merrill Lynch (BAC.N) will arrange the offering, the people said.

SUEK declined to comment.

Very few Russian companies have floated in the past two years, after a peak in IPOs of Russian companies in 2007, when 21 companies raised $21.1 billion, according to Thomson Reuters data.

But the market is reopening as UC RUSAL's $2.6 billion Hong Kong/Paris listing draws solid investor demand. RUSAL, the world's biggest aluminium producer, is likely to price the deal towards the high end of an indicated range.

SUEK's offering is likely to come to the market three months after its planned $300 million to $500 million Eurobond sale, which could take place as early as March. [ID:nLDE60H1GZ]

(Reporting by Daisy Ku; Editing by Erica Billingham)