EU agency may not be fully prepared to wind down failing banks- auditors

* Single Resolution Board has shortcomings and understaffed

* Auditors' report is part of regular oversight of EU institutions

* SRB is facing lawsuits after wind-down of Spain's Banco Popular

BRUSSELS, Dec 19 (Reuters) - The European Union's agency in charge of disposing of failing banks may not be fully prepared to deal with a new banking crisis, EU auditors said on Tuesday, casting doubt on a body facing dozens of lawsuits for its forced sale of Banco Popular.

The Single Resolution Board (SRB) was established after the euro zone banking crisis, which forced governments to use hundreds of billions of euros of taxpayer money to rescue failing banks.

The body, chaired since its creation in 2014 by Elke Koenig, Germany's former financial regulator, is intended to minimise the cost to taxpayers and depositors when failing banks are wound down, forcing the losses on their shareholders and bondholders.

To achieve its target, the SRB needs to devise resolution plans for the 142 euro zone banks under its watch, which should detail banks' critical functions that need to be protected in a rescue.

But the SRB has drawn up detailed plans for only some of the banks and those available are "still missing key elements," the European Court of Auditors said in a report published the day after Koenig's mandate was renewed for five years.

The auditors said the banking agency "was unable to provide an overview of critical functions for every bank under its remit," raising doubts on how the SRB assesses bank liabilities.

The report, which is part of a regular oversight of EU institutions, also said the plans scrutinised by auditors did not show the "potential contagion risk" caused by a bank resolution, warning that this could turn a lender's rescue into another bank's problem.

The SRB, in replies included in the report, said the auditors' report was based on last year's resolution plans and many of the shortcomings were already addressed this year.

"We are saying that the resolution planning (..) is inadequate in a number of respects," Kevin Cardiff, the auditor responsible for the report said in a news conference.

"But that is not the same as saying that in a particular case the institution would not perform well," he added.

So far, the SRB has tested its powers to wind down a bank only once, with the forced sale in May of Spain's ailing Banco Popular to a larger rival, Banco Santander. Popular's bondholders who lost their investments in the process are suing the SRB. EU regulators called the rescue a "success" because it spared depositors and did no damage the Spanish banking system.

The sale of Popular did not reflect the resolution strategy that the SRB had planned for the bank, the agency admitted after the overnight rescue. The most common option is a bail-in, in which a bank continues its operations after its creditors have paid the rescue bill.

The auditors said the SRB's resolution plans did not properly take into account possible "unanticipated, short-term developments", increasing the chances that in the future the agency will again be forced "to deviate from the plans," as it occurred with Popular.

The SRB's shortcomings were partly caused by the fact that the agency is "seriously understaffed", auditors said. The SRB replied that it will reach 306 staff members early next year - still short of its target of 350. (Reporting by Francesco Guarascio)