PREVIEW-Crucial weekend nears for ABN AMRO

* Sale deadline is midnight Monday

* Sixth deadline this year expected to be final

* Talks progressing, government optimistic

By Ben Berkowitz

AMSTERDAM, Oct 16 (Reuters) - With three days to go before a crucial asset sale deadline that should decide the future of Dutch banks ABN AMRO [ABNNV.UL] and Fortis Bank Nederland [FORTH.UL], there was optimism but no firm evidence on Friday that a deal could be reached in time.

Monday at midnight is the deadline for the Dutch government to present a deal to sell certain ABN AMRO assets to the European Commission to meet the demands of the competition regulator. It has been negotiating on and off for months with Deutsche Bank (DBKGn.DE) about such a sale.

And without a deal, it will not be allowed to merge ABN AMRO and Fortis Bank Nederland, both of which it nationalised last year.

As it stands the government wants to merge the two banks and take the combined group public sometime in 2011 or later.

Without a merger, its exit strategy for its 20 billion euro-plus investment is much less clear. "Talks are ongoing. Things are progressing," a spokeswoman for the Dutch finance ministry said Friday. Deutsche Bank declined to comment. However industry sources said talks were likely to run close to Monday's evening deadline.

When a consortium including Fortis FOR.BR bought ABN AMRO in 2007, the EU ordered Fortis to sell some ABN AMRO assets in the Dutch small and medium enterprise banking sector to address competition concerns.

When the government nationalised Fortis's local operations in Oct. 2008, that obligation remained.

The original remedy was to be the sale of ABN AMRO assets to Deutsche Bank, including commercial bank HBU, 13 advisory branches and two corporate client units. The Dutch state tried to renegotiate that deal because the original pact would have led to about 300 million euros in losses.

A July deadline for the sale was later extended to August, then to early September, late September, Oct. 2 and finally to this coming Monday.

European Competition Commissioner Neelie Kroes justified the latest extension by saying there was an "imminent" deal with a large international bank for HBU and the other assets -- and has made clear since then that an HBU sale by next Monday is essentially the only suitable outcome she can see. (Reporting by Ben Berkowitz)