HSBC <0005.HK>, Citibank and Barclays will be the lead managers for an international bond sale of up to $1 billion (662 million pounds) for Sri Lanka's state-owned National Savings Bank (NSB), sources said on Wednesday.

One of four sources with knowledge of the deal said the NSB may go to the international market either later this month or next month.

"HSBC, Citibank, and Barclays have been selected as the joint lead managers to borrow up to $1 billion from an international bond sale," the source told Reuters.

Three other sources also confirmed the deal.

NSB's General Manager, Hennanayake Bandara, declined to comment on the deal.

If it succeeds it will be the biggest ever Sri Lankan corporate bond. State-owned Bank of Ceylon last year sold a $500 million five-year bond at a 6.875 percent yield.

NSB is the only bank whose deposits are fully guaranteed by the government.

The bank's investments in government securities accounted for 72 percent of its total deposits of 422.06 billion rupees ($3.31 billion) as of September 30, 2012.

The bank's decision to tap international market comes as Sri Lanka had decided not to go for an international sovereign bond this year after the island nation sold three $1 billion, 10-year eurobonds in the previous three consecutive years.

Finance Secretary P.B. Jayasundera, speaking at a forum last week, said the government has permitted banks to raise funds through international borrowing this year.

"Our banks must start marketing their balance sheet. Our (government) balance sheet has been sufficiently marketed. I don't think we should expose it further," he said.

Jayasundera also said the government had permitted listed development lenders DFCC Bank and National Development Bank to go for foreign comm

(Reporting by Shihar Aneez and Ranga Sirilal; Editing by Michael Urquhart)