UPDATE 1-Citi set to put Egg up for auction - report

* Auction for Egg may start after summer-report

* Citi reducing non-core asset portfolio, which includes Egg

(Adds Citi comment)

LONDON, Aug 4 (Reuters) - Citigroup (C.N) is poised to put its UK online bank Egg up for auction as part of a plan to dispose of more than $800 billion in unwanted assets, the Financial Times said on Wednesday.

Citing people close to the situation, the newspaper said Citi had been holding informal talks with potential buyers over Egg for some time but it was now preparing to start an auction for the business, most likely after the summer months.

The bank declined to comment on the report, but said in an emailed statement that its strategy to reduce assets within its non-core Citi Holdings portfolio -- which includes Egg -- was public knowledge.

Egg, which was created by Prudential plc (PRU.L) before being sold to Citi in 2007, could attract interest from UK and international groups, including Spain's Santander (SAN.MC) and Tesco's Metro Bank MBFS.PK, the FT said.

Virgin Online, one of Egg's rivals, is thought to have signalled it is not interested in Egg, the paper said. (Reporting by Karolina Tagaris and Victoria Howley; editing by Simon Jessop)