BayernLB kicks off sale of bank unit LBLux - sources

FRANKFURT Jan 18 (Reuters) - German regional public sector lender BayernLB has started preparations to sell its Luxembourg-based corporate lender and private wealth unit LBLux, three sources familiar with the process said.

BayernLB has mandated French bank Societe Generale to manage a sale which is still at too early a stage to talk seriously about a price or potential bidders, the sources said.

Germany's second-biggest public sector lender is still sounding out the market and discussing the sale's organisation, one of the sources said on Friday. "The formal sales process has not yet started."

LBLux is profitable and has equity capital of 300-400 million euros ($399-$532 million), with assets totalling nearly 6 billion euros, a second source said, adding the bank may be easier to sell than BayernLB's troubled Hungarian unit, MKB.

LBLux handles its parent's corporate banking in the Benelux area as well as offering investment advisory and portfolio management services to wealthy customers.

BayernLB was rescued by its home state of Bavaria in the financial crisis and the European Union has set out tough demands for approving that aid. The lender must repay 5 billion euros aid received from Bavaria, shrink its balance sheet and sell holdings such as LBLux.

Earlier this week, BayernLB sold a stake of roughly 2 percent in German airline Lufthansa.

The sale of its property unit GBW, which could garner billions of euros, was expected to be finalised in the next few months.

BayernLB and Societe Generale declined to comment. ($1 = 0.7524 euro) (Reporting by Andreas Kroener; Writing by Jonathan Gould; Editing by Dan Lalor)