State-rescued Lloyds Banking Group announced on Tuesday its intention to float part of its TSB unit in an effort to meet European Union competition rules.
LBG plans next month to sell about 25 percent of ordinary shares in TSB to list on the London Stock Exchange, said a statement issued by the bank that gave no details on pricing.
LBG will complete a full sale of the stake by the end of next year, it added.
"The decision to proceed with an initial public offering of TSB is an important further step for the Group as we act to meet our commitments to the European Commission," LBG chief executive Antonio Horta-Osorio said of the EU's executive arm.
The part-nationalised Lloyds Banking Group relaunched TSB as a standalone lender last September as it prepares for LBG's full return to the private sector.
LBG remains 25 percent-owned by the government after recent reductions to the taxpayer's stake and as the banking group slowly recovers from a massive bailout.
It was rescued at the height of the notorious 2008 global financial crisis with £20 billion of state funds, leading the EU to demand that it downsize.