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(Corrects size of government bailout in para 2 of Sept. 9story)
* Lloyds plans to list TSB business in summer 2014
* Sale part of drive by regulators, UK to improvecompetition
* New bank will only have semi-independence - Lloydsdirector
* TSB re-launched as standalone business
By Matt Scuffham
LONDON, Sept 9 (Reuters) - More than 600 bank branches beingrebranded as TSB by Britain's Lloyds Banking Group could be bought by a trade or financial buyer before a flotationbeing planned for next year, the head of the new business said.
Lloyds was ordered to sell the branches by Europeanregulators as a penalty for receiving a 20-billion-pound ($32billion) government bailout in the 2008 financial crisis.
However, a deal with the Co-operative Bank collapsed in April amid concerns over the Co-op's capitalstrength.
Lloyds now plans to run the business on a standalone basisahead of a listing in summer 2014, although TSB's new boss PaulPester said that could change.
"It's absolutely possible that someone may come in and saythis is a fantastic business we'll make you an offer for it.That's something we can leave Lloyds to deal with," Pester toldreporters at the launch of the new business in central London.
The return of the 200-year-old TSB brand to the high streetafter an 18-year absence is the result of action by regulatorsand the government to introduce greater competition in thecountry's banking sector.
Pester said TSB would focus on a local banking model,"supporting economic growth in the communities it serves". Itwill become Britain's 8th biggest retail bank with 4.5 millioncustomers and a 4.3 percent share of the current account market.
However, Lloyds' Group Retail Director Allison Britton toldReuters TSB's management would initially be granted only "semi-independence" from its parent.
"They can do quite a lot of things themselves but they stillmight have to ask me about many things. They can propose pricingchanges for products but I have to approve them. The same wouldgo with things like risk appetite," she said.
An influential cross-party committee of lawmakers set up toreview standards within the industry said in June that a lack ofcompetition in UK retail banking was an important reason whypoor standards of conduct persisted in the industry.
Susan Kramer, a Liberal Democrat peer who sat on thecommittee, said there was still a lot to be done to break thedominance of Britain's biggest four high street lenders - RBS, Lloyds, Barclays and HSBC - whichcontrol around three-quarters of retail accounts.
"There's a long way to go to get to the point whereconsumers have a real range of choices, where competition bitesin such a way that it changes the behaviour of the big players,"she told Reuters.
Lloyds' Britton said the bank was aiming for a stock marketlisting for the TSB business in the summer of 2014 and that thesale of the business would be done in stages.
"It will be quick. We set ourselves a number of goals -finishing this divestment, repaying the government, returning todividends and profitability. The sooner we can do all of thosethings the better," she said.
Britton said she anticipated investor appetite for thestock, despite a number of other bank share issues scheduled forthe coming months including a rights issue by Barclays, the saleof the government's stake in Lloyds itself, and a possiblelisting of 315 branches by Royal Bank of Scotland (RBS).
"It's a nice balanced strongly-capitalised fullyUK-orientated bank with a good distribution network. I thinkit'll be a great stock but it all comes down to the market andthe price on the day," she said.
($1 = 0.6398 British pounds) (Editing by Jane Merriman and Mark Potter)
