UPDATE 1-New capital rules should be phased in - D. Bank CEO

* Wants staged approach to bringing in new rules

* Deutsche Bank CEO favours bailout fund for banks

* Large banks should not be seen as dangerous per se

* Need international coordination of insolvency rules

(Adds quotes and background)

FRANKFURT, Nov 16 (Reuters) - New capital rules for banks should be introduced gradually to avoid unwanted side effects or choking off lending, Deutsche Bank (DBKGn.DE) Chief Executive Josef Ackermann said on Monday.

The Swiss head of Germany's flagship lender told a Euro Finance Week seminar that regulators may be underestimating the danger that banks could start reining in their balance sheets simply in anticipation of new capital rules.

"Against this background it seems worth considering whether the... different approaches should not be phased in gradually rather than introduced at the same time," he said.

"This way we could get a better handle on unexpected side effects or unexpected restrictive effects."

Ackermann also said an international fund to rescue banks could end last-second scrambles to save stricken lenders and cement pan-European supervision of the sector.

Renewing his support for such a plan, Ackermann said that a public-private safety net for toppling banks could be just the ticket for avoiding a repeat of the pell-mell steps used in the current financial crisis.

"Perhaps we have to accept in the end that the state remains the shareholder of last resort in systemic banking crises," he said.

An international fund financed by states and the banks themselves could head off the need for "midnight rescues", reduce moral hazard by setting bailout terms after the fact, and -- if done on a European level -- resolve the chronic problem of how to share the burden among states, he said.

Ackermann, who is also chairman of bank lobby group Institute of International Finance, has already backed setting up an international bailout fund to help rescue systemically relevant international banks.

But deciding which taxpayer and which regulatory authority is responsible when a bank fails is a thorny issue in Europe, which is home to over 40 banks with cross-border operations.

The European Commission is set to hold a public hearing in early 2010 to debate the issue of creating such a fund.

So far it said banking groups need to draw up fair and legally compliant arrangements between EU states on sharing any subsequent losses. [ID:nLL708384]

The Commission wants the 27 member states to know in principle whether they would be required to contribute to stemming the losses of a large bank, how it would be organised and who would trigger such discussions. (Reporting by Edward Taylor and Eva Kuehnen)