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UPDATE 1-German regulator: 'no euro zone bank watchdog until 2014'

* German regulator BaFin sceptical about deadline

* BaFin says does not understand roadmap to ECB bankregulation

* Bank of France, Bank of Spain, Bank of Italy decline tocomment

(Adds comment from France, Spain, Italy, adds background)

FRANKFURT, Oct 9 (Reuters) - Plans to establish a euro zonebank regulator by January 1, 2013, may be pushed back by arounda year, Germany's markets regulator said on Tuesday, in a movethat could delay efforts to help distressed banks.

European leaders agreed at the end of June to set up asingle supervisor to oversee 6,000 banks in Europe, but ElkeKoenig, head of Germany's markets regulator BaFin, said theoriginal deadline to start such supervision was unrealistic.

"I could imagine that we get there in January 2014. That's aguess," she told German television station ARD on Tuesday,adding this was her personal view.

The European Commission hopes that tighter surveillance ofbanks by the European Central Bank, the creation of a fund towind up troubled lenders and a common pan-European guarantee fordepositors will restore confidence in the region after fiveyears of financial crisis.

Germany, the euro zone's economic heavyweight, hascriticised plans to allow the ECB to supervise all euro zonelenders, claiming the central bank will be overstretched if ithas to monitor all 6,000 euro zone banks, including itsstate-owned Landesbanken.

In reality, the ECB will not be in day-to-day charge ofsupervision, which will still lie with national and localregulators. But the ECB will likely leave national supervisorswith less wiggle room to adopt special rules designed to protecttheir home market.

Germany's Landesbanken, for example, are currently allowedto keep using a special form of non-voting capital as a way tofulfil tougher safety rules.

European Central Bank president Mario Draghi on Tuesdayclarified the timetable for creating a new supervisor.

"The ECB is not supposed to take over supervision in threemonths' time and do it. There is a phase-in time. We foreseethat one year will be needed to adapt all the structures,"Draghi told the European parliament.

European Union leaders agreed that unified supervision isneeded to allow the euro zone to directly recapitalise banks viathe European Stability Mechanism (ESM).

Allowing direct recapitalisation of weak banks is seen as away to break the vicious circle linking indebted governments andtheir troubled lenders.

In September the European Commission outlined a plan forhanding over supervisory responsibility to the European CentralBank (ECB).

As a first step, the ECB is set to take responsibility forsupervising banks which have received state aid beginning 2013.From mid-2013 the ECB will add systemically relevantinstitutions, before finally overseeing all euro zone banks by2014.

Upon being asked whether a January deadline for Euro zonebank supervision was realistic, The Bank of France, the Bank ofSpain and the Bank of Italy declined to comment.

Gerard Rameix, head of the French markets watchdog AMF, onTuesday said he had heard nothing to suggest there would be achange to the timeframe. "I think they are playing on words abit. If they are talking about the utmost end of the process,then they are maybe not wrong," Rameix said.

Late on Tuesday Koenig said that although she supported theidea of common supervision in principle, she hasn't understoodhow the transition from national to pan-European supervisionwill work in practice.

"I support the idea of a strong European regulator. But Ihave not seen a roadmap of how we get there," she said.

"The last thing we can afford is to have an interregnumbetween those who are no longer responsible and those who arenot yet in a position to act," Koenig said.

Earlier this month, European Central Bank policymaker JoergAsmussen warned that tapping the euro zone's permanent bailoutfund (ESM) for direct bank recapitalisation - for which the newbank supervision mechanism is a pre-requisite - will only bepossible once supervision was properly set up.

Last month, Germany, the Netherlands and Finland insistedthat the ESM should not be used to solve "legacy issues",essentially saying that highly indebted banks in Spain, Irelandand Greece will remain the responsibility of those countries'governments.

Germany has repeatedly clashed with Brussels over plans togive the European Central Bank (ECB) new banking supervisionpowers, and over plans to set up a common deposit guaranteescheme.

Earlier this month The Basel Committee on BankingSupervision said the EU was failing to apply Basel III bankcapital rules because it softened up a definition of what can beused as core capital.

Basel III says it must be common shares while Germany haspushed hard to include what some regulators see as less provenfinancial instruments which are widely used in the German publicsector banking arm of Landesbanks.

(Reporting by Kerstin Doerr in Berlin; Edward Taylor inFrankfurt; Jean-Baptiste Vey and Lionel Laurent in Paris; JesusAguado Gonzalez in Spain.; Editing by Greg Mahlich and LouiseHeavens)

((edward.taylor@thomsonreuters.com)(+49 - 69 - 7565 1187))

Keywords: GERMANY BANKS/WATCHDOG