HONG KONG/SYDNEY (Reuters) - ANZ Banking Group (>> Australia and New Zealand Banking Group) is exploring plans to sell part or all of its life insurance and pension product development unit, valued at up to $4 billion (2.75 billion pounds) in total, people familiar with the matter said, in line with its broader strategy of raising funds to boost capital.

The plans being worked out by Australia's No. 4 lender come months after it split its global wealth management business into separate arms, one focusing on developing insurance and pension products and the other focusing on distribution.

ANZ is still streamlining the product development division before seeking bids for the business, the people said, declining to be identified as the plans were confidential. The people said no final decision to sell the operation has been made, and ANZ could yet decide to retain the business.

The lender has already held informal discussions with investment banks on a potential disposal, but there is no clear time-frame for the launch of a formal sale process, according to the people familiar with the matter. The business could be valued at between $3 billion and $4 billion overall, according to one person.

Like many global lenders, ANZ is exiting capital-intensive businesses at a time when banks are under increasing regulatory pressures to have a greater capital buffer against souring loans. Last week, ANZ said it has cut 200 Australian jobs due to slowing economy and weak lending growth.

Australia's insurance sector has already seen a shake-up in recent months as the country's banks face increasing pressure to sell off non-core assets. The sector generated A$4.5 billion ($3.3 billion) in profit last year, according market research firm IBISWorld.

Last October, National Australia Bank (>> National Australia Bank Ltd.), the country's No. 1 lender, agreed to sell 80 percent of its life insurance arm to Japan's Nippon Life Insurance. Then earlier this year, Macquarie Group (>> Macquarie Group Ltd) sold its life unit to Zurich Insurance Group (>> Zurich Insurance Group Ltd) for an undisclosed sum.

The ANZ business could attract interest from insurers from Japan and China among others, the people with knowledge of the matter said.

An ANZ spokesman declined to comment.

ANZ took full control of its wealth management and life insurance division in 2009 after buying a 51 percent stake in the business from former joint venture partner ING (>> ING Groep). ANZ has an 8.5 percent share of Australia's A$86 billion life insurance market, according to IBISWorld.

ANZ sold its medical insurance business in New Zealand to nib NZ, a unit of NIB Holdings Ltd (>> NIB Holdings Limited) last year.

(Reporting by Denny Thomas in HONG KONG and Swati Pandey in SYDNEY; Editing by Kenneth Maxwell)

By Denny Thomas and Swati Pandey