Hyundai Oilbank, South Korea's smallest crude oil refiner, has narrowed down a group of banks to handle its up to $2 billion IPO planned for early next year, with Goldman Sachs, Credit Suisse, and Citigroup among the firms selected, sources with direct knowledge of the matter said on Friday.

The list of five foreign banks and 10 local banks will be shortened further for final selection on or around October 21, one of the sources said.

The other foreign banks on the so called short list include, BofA-Merrill and BNP Paribas. Woori Investment & Securities <005940.KS> and Daewoo Securities <006800.KS> are among the local banks placed on the list.

The world's largest shipbuilder, Hyundai Heavy Industries Co Ltd <009540.KS>, which owns a 91.1 percent stake in Hyundai Oilbank is running the public float process.

South Korean corporates typically choose multiple underwriters for their stock offerings, often spreading out responsibility across foreign and local banks for large deals. Such a practice often prompts complaints from the banks, knowing their fee will have to be shared with all involved.

Still, banks bid aggressively for these large, high-profile deals, as these transactions help seal a relationship with a corporate for future transactions, assuming all goes well. Even for a low fee, such deals also helps boost banks' ranking status on league table credits, which they use for external marketing and internal progress checks.

The offering's early stages comes at a brutal time for equity offerings, given the market volatility. The company, it's top shareholder and the banks hope the deal's target date of next May or June will come when markets settle.

Mirae Asset Life Insurance has delayed its plan to next June after deciding to offer preferred shares to private equity funds.

Sources say it will be the largest South Korean IPO since the $4.4 billion offering by Samsung Life Insurance <032830.KS> last year.

A Hyundai Heavy spokesman declined to comment. All the banks mentioned either declined to comment or could not immediately be reached.

Other local banks on the deal include Samsung Securities <016360.KS>, Korea Investment & Securities, Mirae Asset Securities <037620.KSs and Shinhan Investment Corp.

(Additional reporting by Jungyoun Park; Editing by Michael Flaherty)