Last checked at 
* Sale could come before the end of the month -sources
* Advisers making informal pitches to Lloyds -sources
* 90-day lock-up expires at Tuesday market close
* TSB IPO in June was 11 times over-subscribed (Adds comment from industry source, updated shares)
By Matt Scuffham and Freya Berry
LONDON, Sept 23 (Reuters) - Britain's Lloyds Banking Group could launch a second sale of shares in majority-ownedTSB Banking Group in the next week after a lock-upperiod expires on Tuesday, banking sources said.
Investment banks have been making informal pitches to Lloydsfor a mandate to sell the shares. With TSB about to enter a"closed" period ahead of its Oct. 24 third-quarter results, theoffer could come as soon as this week, one source said,cautioning that there was no certainty on the timing of a sale.
Lloyds in June sold a 38.5 percent stake in TSB, Britain'sseventh-largest lender, at 260 pence per share, valuing thebusiness at 1.3 billion pounds ($2.1 billion). The offering was11 times oversubscribed by investors attracting strong demandfrom investors in the United States as well as Britain.
Investors were attracted by an exposure to Britain'seconomic recovery from a bank which is untainted by issues ofpast misconduct. They also saw TSB as a viable challenger toBritain's 'big 4' banks - Lloyds, Royal Bank of Scotland, Barclays and HSBC.
"People are attracted to it because it's a pure, cleanretail bank. It doesn't have any of the sins of the past or anyof the potential issues that others have," one industry sourcetold Reuters.
TSB is one of a number of British banks that have eitherrecently listed on the stock exchange or are preparing to do so,tapping into investor appetite for new lenders aiming tochallenge the established big banks.
Aldermore said on Monday that it planned to float in Londonnext month, in a debut that could value it at up to 900 millionpounds. Virgin Money, backed by entrepreneur Richard Branson, isexpected to float later this year while Santander UK (part ofSpain's Santander, Shawbrook and Metro Bank are alsopreparing for initial public offerings.
Lloyds, which is expected to sell the remaining shares intwo further tranches, agreed not to sell any more shares for 90days following the first sale. The expiry of that lock-up atTuesday's market close leaves it with a short window, beginningon Wednesday, in which it can sell the shares ahead of itsclosed period ahead of results.
The shares have performed well since their debut and aretrading at 281 pence, 8 percent ahead of the price of the IPO,making a sale of about half of the remaining shares feasible,the sources said.
Lloyds and its advisors had not wanted a sale of TSB sharesto clash with a further sale of the government's remainingshares in Lloyds itself.
However, shares in Lloyds are trading below the price of thegovernment's last sale in March, ruling out a further sale thismonth and clearing the way for Lloyds to sell shares in TSB.
Lloyds was forced by European regulators to sell the 631branches which now form TSB as a condition of receiving stateaid during the financial crisis five years ago. It musttherefore now sell the whole of TSB by the end of 2015.
Any sale will be dependent on stock market conditions, thesources said, and the bank remains confident it will meet thedeadline even if a second sale doesn't happen this month.(1 US dollar = 0.6102 British pound) (Editing by Carolyn Cohn, David Holmes and Clara FerreiraMarques)
