* Alico IPO could fetch as much as $5 bln - sources
* About 10 banks seen in race - sources
* Alico IPO may come after AIA offering - source (Adds details, bank comments, background, byline)
By Paritosh Bansal
NEW YORK, Sept 8 (Reuters) - American International Group Inc is interviewing banks this week to manage a planned initial public offering of life insurance unit American Life Insurance Co, sources familiar with the matter said.
An IPO could fetch as much as $5 billion for Alico, depending on the size of the stake that is sold, the sources said. AIG has said it plans to list the company in New York.
About 10 banks, including UBS AG, Deutsche Bank AG, Citigroup Inc, Credit Suisse Group AG and Goldman Sachs Group Inc, are expected to be interviewed for the job, the sources said on Tuesday.
Morgan Stanley is expected to get a lead role as it has been guaranteed such a position by the Federal Reserve Bank of New York for any IPO of AIG units, the sources said.
An IPO of Alico is expected only after the public offering of shares in another major AIG property, American International Assurance Co Ltd, which has been slated for early next year, one of the sources said.
Morgan Stanley and Deutsche Bank have been selected as global coordinators for the AIA offering.
AIG, Citigroup, Deutsche Bank, Credit Suisse and Goldman declined to comment. UBS and Morgan Stanley could not be reached immediately for comment. The sources declined to be identified because the process is not public.
Alico sells life insurance and retirement products to 19 million customers through a distribution network that includes 40,000 agents. It operates in 54 countries but generates more than half of its revenue in Japan.
In July, another source told Reuters that AIG was in talks with MetLife Inc for a possible sale of Alico. The status of those talks could not be determined on Tuesday.
Late last month, AIG's new chief executive, Robert Benmosche, said the company was still planning IPOs for Alico and AIA, preparing them from an eventual sale when the time was right.
The divestitures are part of the insurer's efforts to repay U.S. taxpayers the roughly $80 billion it received as part of a larger federal rescue.
Separately, Credit Suisse downgraded AIG to "underperform" from "neutral," saying near-term sale of businesses would leave little to no value for common equity holders.
AIG's shares were off $3.77, or 9.4 percent, at $36.28 during afternoon trading on the New York Stock Exchange. (Reporting by Paritosh Bansal, editing by Gerald E. McCormick and Ted Kerr) (For more M&A news and our DealZone blog, go to http://www.reuters.com/deals)