Lloyds Banking Group is valuing TSB below its book value with a price range of 220p-290p per share, as it prepares to float 25% of TSB later this month.
TSB has a net asset value of £1.6bn, but the mid-point of the share price range will give it a value of just under £1.3bn, and potentially as little as £1.1bn.
Lloyds needs to sell all of TSB by the end of next year to comply with European competition regulation.
Lloyds, 25% owned by the government, has said it plans to announce the final share price on 24 June.
TSB is the seventh largest retail bank in the UK, with more than 630 branches and around 4.5 million customers.