* Price range narrowed to between 250-270 pence/share
* New range values TSB at minimum 1.3 billion pounds (Adds further details)
By Vikram Subhedar and Matt Scuffham
LONDON, June 17 (Reuters) - New British bank TSB will be valued at 1.3 billion pounds or more when it lists on the stock market this week after its parent Lloyds Banking Group lifted the minimum price it will sell shares at, people familiar with the matter said.
Lloyds has narrowed the price range for the sale of a 25 percent stake in TSB to between 250 pence and 270 pence, sources familiar with the matter told Reuters on Tuesday. One source said the sale was "well-oversubscribed" within that range.
The new range values the business at a minimum of 1.3 billion pounds ($2.10 billion) or 0.8 times its book, or net asset, value. It was originally priced at between 220 pence and 290 pence per share, or between 0.7 and 0.9 times its book value, valuing the business at a minimum of 1.1 billion pounds.
Lloyds, which is 25 percent-owned by the government, was ordered to sell the 631 branches which form TSB by European regulators as a condition for their approval of state aid received by the bank during the financial crisis.
The IPO was initially priced conservatively, reflecting a cooling of investor interest in UK company flotations in recent weeks. But one source said investor appetite had increased after Bank of England Governor Mark Carney indicated UK interest rates could rise sooner than financial markets expect, potentially boosting the bank's profitability.
TSB's IPO prospectus showed the bank had achieved only modest profits over the past 3 years. It made an underlying profit of 172 million pounds last year, compared with 28 million in 2012 and 57 million in 2011.
The shares are due to start trading on Friday. The sales book is due to close on Thursday, after which the final price will be set.
$1 = 0.5956 British Pounds Editing by Steve Slater