* EU agrees Spain does not need to extend bank rescue
* Bailed-out bank sales seen difficult without more aid
* Seven bidders line up for NCG Banco - sources
* Many potential bidders ask for state aid - sources
By Sarah White and Jesús Aguado
MADRID, Nov 14 (Reuters) - Potential buyers of Spain's rescued banks, which include foreign investors, are pressuring the government to sweeten sales with more state aid, just as Madrid pulls its financial sector off European support, banking sources said.
European finance ministers agreed on Thursday to Spain ending a 41-billion-euro ($55 billion) European rescue programme without drawing more funds, after it cleansed weak lenders of soured property assets and began financial reforms.
The aid was only a part of the 100 billion euros offered to plug capital holes in the wake of a 2008 real estate crash.
However, the government may still have to pump more cash into nationalised NCG Banco from Galicia, and Barcelona-based Catalunya Banc, as potential buyers clamour for more protection against losses, bankers familiar with the looming sales said.
Spain's bank restructuring fund FROB is widely expected to formally open an auction of NCG Banco in the coming weeks.
"Bidders want the bank's books completely cleaned. Some even see a scenario where the FROB would have to inject more money and sell it for a euro," said one investment banker in Madrid.
Spain requested last year's aid when it was in the eye of the euro zone crisis, which pushed up debt costs as it was struggling to cope with the magnitude of the banking problems.
The state's own financial strains have now eased somewhat, giving it room to offer further funds, though the government has resisted, arguing rescued banks have been cleaned up after their property assets were transferred to a separate 'bad bank'.
Suitors for NCG Banco, while attracted by its dominant position in Galicia, believe it still has many other problematic loans, three banking sources said.
NCG Banco took 9 billion euros in rescue funds from Spain and Europe and returned to profit in the year to September. But deposits fell nearly 3 percent compared with the same period in 2012, and its non-performing loans as a percentage of total credit reached 16.7 percent.
Spanish banks' average bad loan ratio was 12.1 percent in August.
FOREIGN FUNDS LINE UP
At least seven potential bidders, including four banks and three investment firms, have expressed interest in NCG Banco in the past fortnight, a person familiar with the situation said.
Centerbridge Partners and WL Ross, the turnaround group of U.S. billionaire Wilbur Ross who invested in a crisis-hit Irish bank, are among them, the person said.
FROB declined to comment, while Centerbridge and WL Ross did not respond to requests for comment.
Top banks Santander, BBVA and Caixabank have previously said they would look at NCG Banco.
Several prospective bidders have said they wanted government-funded asset protection schemes to shield them against future losses, three banking sources said.
U.S. financial services firm Guggenheim Partners is also among those interested in NCG Banco, the three sources said, and it too wants more state protection against losses, a fourth source said. Guggenheim Partners declined to comment.
Interest from international investors has complicated what will already be a politically-charged auction, in part because managers at NCG Banco favour a solution that would help it remain a regional champion.
"Guggenheim is the big favourite of the management team," said another senior investment banker. "It would mean the Galician bank could keep its independence and not be swallowed up by other national players."
But handing out state aid to foreign investors is an unattractive option for the government, while Spanish banks have argued such firms would be a riskier bet than a domestic buyer.
Funds have already been told they would have to set aside around 800 million euros, or 3 percent of NCG's risk weighted assets, as a safety net if they want to bid for the bank.
Buyers of NCG Banco will also likely receive another boost from the state in the form of tax credits. Like Spanish rivals, NCG Banco has so-called deferred tax assets, some of which the government will turn into state-backed credits so that they can count as capital under new Basel III rules.
This rule change is one of the few levers the government has to negotiate with bank bidders.
An attempted auction of Catalunya Banc collapsed earlier this year when bidders asked for asset protection schemes. It is also set to come on the block again in the coming months.