TOKYO (Reuters) - Toshiba said on Friday it was considering splitting off part of its chip business, with listing it an option, in a move that would help it raise capital needed to fund restructuring following a $1.3 billion accounting scandal.

Toshiba is in urgent need of restructuring after profit-padding revealed a number unprofitable businesses. It agreed in October to sell its image sensor business to Sony Corp.

The accounting scandal rendered Toshiba on the Tokyo Stock Exchange's so-called watch list, meaning the conglomerate is almost unable to raise funds by selling shares or bonds, to bolster capital which could be depleted by restructuring.

"We would consider selling every asset that is possible to sell," Chief Executive Masashi Muromachi said at an analyst briefing.

He also said NAND flash memory chips comprised a core part of Toshiba's business and would not be sold.

That effectively leaves system LSI and discrete chips as options to be split off.

(Reporting by Makiko Yamazaki; Writing by Edwina Gibbs; Editing by Muralikumar Anantharaman and Christopher Cushing)