State-backed Royal Bank of Scotland (RBS.L) plans to raise up to $4 billion from the share flotation of its U.S. bank Citizens Financial Group this month, putting it on track to be the biggest U.S. share offering by a bank this year.

RBS, which is 81 percent owned by the UK government after being bailed out in 2008, has come under pressure from UK regulators to improve its capital base and focus on its core domestic business, and the bank had already made clear it planned to sell up to a quarter of Citizens this year through an initial public offer (IPO).

RBS said on Monday it would sell 140 million shares in Citizens at between $23 and $25 each in the IPO, and could sell a further 21 million shares in the sale. (1.usa.gov/1tlcS0t)

Up to 29 percent of the bank will be sold. At the top end of the range Citizens will be valued at $14 billion, at the upper end of a $9 billion to $15 billion range estimated by analysts.

All the shares in the offering are being sold by RBS, which said the sale will "significantly improve" its capital and is "an important milestone" for both RBS and Citizens. It did not set a date for the listing but industry sources have said it could occur at the end of this month.

Analysts said the separation of Citizens from RBS, expected next year, should boost the UK bank's core capital adequacy ratio by 2-3 percentage points, although the initial IPO is unlikely to have much impact. RBS has previously said it expects to fully sell out of Citizens by the end of 2016.

Citizens, which provides retail and commercial banking services to about 5 million customers in the United States, intends to list its common stock on the New York Stock Exchange under the trading symbol "CFG".

Citizens had $130 billion of assets and more than 1,200 branches in 11 states across the New England, Mid-Atlantic and Midwest regions at the end of June.

Morgan Stanley (MS.N), Goldman Sachs (GS.N) and JPMorgan (JPM.N) are the lead advisors on the deal.

Shares in RBS were down 2.8 percent by 1306GMT, hurt by worries it could face a fresh upheaval if Scottish residents votes in a referendum on Sept. 18 for independence, after a swing in support for the 'Yes' campaign in an opinion poll.