UPDATE 2-Doral Financial to raise up to $600 mln, shares fall

* Is the latest Puerto Rican bank chasing deals

* Says will issue up to 126 mln shares

* Stock falls over 12 pct

(Adds analyst comment, updates stock movement)

April 19 (Reuters) - Mortgage lender Doral Financial Corp (DRL.N) said it will raise up to $600 million through a private placement, joining a slew of Puerto Rican firms chasing regulator-backed deals.

Shares of the company which fell 5 percent before market, dropped further to trade down 12 percent at $5.60 in morning trade on the New York Stock Exchange.

The company said $180 million of the total raised amount will be permanent capital, which will also be used to fund a Federal Deposit Insurance Corp-assisted deal.

The remaining amount will be held in escrow, and is contingent upon completing an FDIC-assisted deal.

"We believe Doral is likely targeting R&G Financial Corp RGFC.PK which represented $6 billion in assets at the end of 2009," analyst Brett Scheiner of FBR Capital Markets said in a note to clients.

R&G Financial along with at least two other Puerto Rican banks are under cease and desist orders from regulators, and there is rising speculation in the market that the Federal Deposit Insurance Corp (FDIC) may take over operations.

Puerto Rican banks are likely to see a round of consolidation soon, as regulators move to close underperforming lenders, giving Popular Inc (BPOP.O), the biggest player, and Doral Financial an excellent chance to bulk up.

The company will issue 126 million common shares if the full $600 million is raised, Doral said in a statement.

Doral Financial said the securities to be issued are a combination of common stock and non-voting, mandatorily convertible preferred stock.

Barclays Capital acted as exclusive placement agent on behalf of Doral, the company said in a statement.

For a related story, please double-click [ID:nSGE6340GZ] (Reporting by Brenton Cordeiro and Anurag Kotoky in Bangalore; Editing by Anil D'Silva)