Spain's Banco Santander has appointed advisers to spin off its Brazilian business in a 2.6 billion-pound ($4.3 billion) initial public offering to create one of Brazil's largest banks, the Financial Times reported.

The report said Santander was drawing up the plans to float at least 20 percent of Banco Santander Brasil on the Brazilian stock exchange within the next three months, citing a source close to the bank.

Bank of America-Merrill Lynch, Credit Suisse, UBS and Santander are in place to underwrite the deal, with Bank of America-Merrill Lynch taking the role as lead coordinator after it fully underwrote Santander's 7.2 billion euro rights issue last November, said the report.

($1=.6045 Pound)

(Reporting by Rhys Jones; Editing by Tim Dobbyn)

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