Italy's fifth largest bank is looking to sell roughly 60-70% of the unit which focuses on life insurance and includes stakes in a series of joint venture platforms with the likes of British insurer Aviva, the sources said.

UBI has hired KPMG to auction off the assets and wants to receive binding bids towards the end of September, one of the sources said.

The deal is expected to value the entire business at about 1 billion euros (921.2 million pounds), the sources said.

UBI and Cattolica declined to comment while CNP Assurances was not immediately available for comment.

UBI boss Victor Massiah said last week that the bank would unveil a reorganisation of its insurance operations in conjunction with its new business plan which is due by the end of the year.

UBI holds a 40% stake in a strategic partnership with Italian insurer Cattolica, known as Lombarda Vita, and has full control of BAP Assicurazioni. Additionally it has a 20% stake in a joint venture with Aviva, known as Aviva Vita.

The Italian bank is in the process of bundling the assets under a holding company and could raise between 600 and 800 million euros by selling a majority stake in the division, the sources said.

The sale initially drew interest from several European rivals including Italy's financial services firm Unipol which later decided against bidding, the sources said.

Based in Verona, Cattolica Assicurazioni focuses on bancassurance products and is hoping to take control of its existing life insurance partnership with UBI as well as the other assets for sale, the sources said.

The 123-year old company has hired UBS and Nomura to handle the talks, the sources said.

French insurer CNP Assurances already partners with Italian bank UniCredit but made international expansion a priority after selling a majority stake to French state-owned mail operator Banque Postale [LAPSTE.UL].

(Reporting by Pamela Barbaglia in London; Additional reporting by Andrea Mandala and Stephen Jewkes in Milan; Editing by Keith Weir)

By Pamela Barbaglia