* Unit valued at $3.2 bln at lower end of pricing range
* Indicative pricing range looks aspirational - analyst (Recasts and writes through with pricing details)
By Byron Kaye
SYDNEY, Jan 18 (Reuters) - National Australia Bank Ltd NAB.AX , the country's biggest lender by assets, has valued its UK unit, Clydesdale Bank Plc IPO-CLBP.L , at up to A$4.3 billion ($3 billion), according to IPO pricing terms.
The indicative pricing range was quite wide at 175-235 pence per share or a A$3.2 billion valuation for the unit at the lower end. But Bell Potter analyst TS Lim said NAB may have to settle for even less, given declines in share markets.
"What they've put out is aspirational," he said. "It could fall below, mainly because of market dynamics, but we won't find out until everything has been locked and loaded."
NAB, which bought the business in 1987, said it planned to quit the 177-year-old British bank in 2014 after facing a consumer backlash over methods used to sell loan insurance.
It is planning to sell 25 percent of the unit in an initial public offering and spin off the rest to its shareholders. The unit's shares are slated to be listed on the London stock exchange on Feb. 2 after final pricing on the same day.
The Australian lender also said it may choose not to proceed with IPO or proceed with a smaller offering, in which case it would retain some ownership in the bank.
Australia's major banks are feverishly raising cash by issuing shares and selling non-core business units after new rules require them to have a greater amount of cash in reserve as a buffer for their loan books.
In October, NAB sold 80 percent of its life insurance unit to Japan's Nippon Life Insurance Co NPNLI.UL for about $1.65 billion. in 2015, it sold U.S.-based Great Western Bank for A$1.5 billion.
Clydesdale said last week that trading in the three months to December was in line with expectations. = 0.7006 pounds)