* Several indications of interest received -sources
* Non-binding indications received by Morgan Stanley-sources
* European Union demands change of ownership by 2011
* Auction for WestLB underway
DUESSELDORF, Germany, Oct 28 (Reuters) - Ailing German state-controlled lender WestLB, which has been put up for sale, has attracted the interest of several potential buyers, two people familiar with the bank said on Thursday.
Non-binding indications of interest have been handed to bankers at Morgan Stanley who have been commissioned to manage any sale.
WestLB, which is partially owned by the German state of North Rhine-Westphalia and local savings banks, has been put on the block at the request of the European Union, as a condition for EU approval of state aid granted in the financial crisis.
Brussels has demanded that the Duesseldorf-based lender, which a regional politician said is worth at least 10 billion euros ($13.9 billion), must find new owners by the end of 2011.
At the same time, WestLB is holding talks over a possible merger with Bavarian peer BayernLB.
A merger of the two lenders would create Germany's third-biggest bank by assets after Deutsche Bank and Commerzbank, overtaking troubled rival LBBW. (Reporting by Matthias Inverardi in Duesseldorf, writing by Edward Taylor)