(Corrects 10th paragraph to show Raiffeisen Zentralbank, not Raiffeisen Bank International, owns a stake)
* Core owners to repay 300 million euros in state aid
* Banking business split off into Investkredit
* Results due on Monday as stress test looms
VIENNA, April 15 (Reuters) - Oesterreichische Volksbanken's (OTVVp.VI) main shareholders will chip in 300 million euros ($433.7 million) to help Austria's fourth-biggest bank start repaying state aid this year as planned.
"Our main owners, the 62 (regional) Volksbanken, have decided in principle to repay Austria the first tranche of participation capital worth 300 million euros this year," Chief Executive Gerald Wenzel said in a statement on Friday.
The regional banks have agreed to buy 300 million euros of the group's 1 billion euros of non-voting participation capital before the year is out and repay the state.
If the tranche were not repaid, Austria could take control of the group that was hit hard by the financial crisis.
In a separate transaction, the main owners will convert the capital into common stock, a group spokesman said.
This means the deal will have no impact on the group's Core Tier 1 equity ratio -- a key factor in European bank stress tests that Volksbanken will be subject to this year.
The move is part of a wider restructuring designed to free up capital and slim the bank down to a profitable size.
The group is splitting off its banking business into its Investkredit Bank unit in a de-merger planned for May 19. Investkredit will also absorb the remaining 700 million euros in state participation capital the group got during the crisis.
The de-merger is set to wrap up in the second half of the year pending approval by shareholders regulators, it said.
PARTS FOR SALE
Volksbanken, which reports 2010 results on Monday, is controlled by the group of regional cooperative banks, with DZ Bank DGBGg.F and Austria's Raiffeisen Zentralbank also owning stakes.
DZ declined comment on the move by the majority shareholders which is set to dilute minority owners.
Volksbanken made a 1.1 billion euro loss in 2009 after real estate assets and corporate loans soured.
It put its 51 percent stake in eastern European arm Volksbanken International (VBI) and its sister leasing business up for sale in December. Russia's Sberbank SBER03.MM has the inside track to buy VBI, sources have said. [ID:nLDE73C1OW]
Ratings agency Moody's cut Volksbanken's long-term senior debt ratings by one notch to Baa2 this month after reassessing assumptions for future state support. [ID:nLDE73521X]
Volksbanken reported a Tier 1 capital ratio of 8.9 percent at the end of September. Stripping out hybrid capital and minority interests, it has a 2.4 percent core Tier 1 ratio, Moody's has reckoned.
The pass mark in European bank stress tests is 5 percent. [ID:nLDE7370K9] (Additional reporting by Angelika Gruber in Munich; Editing by David Cowell)