Govt in favour of gradual Anglo wind-down -reports

* Govt has said it is united over what to do with Anglo

* European Commission's opinion will be key

* Decision on Anglo's future expected this month

DUBLIN, Sept 2 (Reuters) - Ireland's government now favours a gradual wind-down of nationalised lender Anglo Irish Bank [ANGIB.UL] rather than a split of the institution and its assets into "good" and "bad" banks, newspapers reported on Thursday.

Prime Minister Brian Cowen has come under pressure from his junior coalition partners to close Anglo Irish amid investor fears that the cost of propping it up will continue to rise, putting pressure on already stretched state finances.

The government issued a statement after a cabinet meeting on Wednesday saying that it was united in its determination to resolve Anglo's future. [ID:nLDE6801U0]

The Irish Times, citing government sources, said on Thursday that a wind-down had now become the more likely option. Giving no source, the Irish Independent said it was understood that the government had moved away from the idea of putting 20 percent of the bank into a new "good" bank.

Anglo's management favours the carving out of a small niche business lender using around 10-15 billions euros of assets left after the transfer of soured property loans to a state-run bad bank or NAMA.

Non-performing loans that have not been transferred to NAMA would be parked in Anglo's own "bad bank". Anglo's management has said this is the cheapest option because a wind-down would create enormous funding requirements for the state.

But Cowen's coalition partners, the Greens, said earlier this week they would like to see a wind-down of the lender, whose woes have sent Ireland's sovereign borrowing costs soaring.

Finance Minister Brian Lenihan has said a decision on Anglo's future will be made this month following discussions with the European Commission, whose opinion will be key.

(Reporting by Carmel Crimmins; editing by Patrick Graham)