UPDATE 1-Sweden sceptical on EU banking union plans

* Sweden rejects ECB supervision of biggest Nordic bank

* Finance minister raises objections to current bank plan (Adds Borg quotes)

STOCKHOLM/HELSINKI, Sept 15 (Reuters) - Sweden will not accept European Central Bank policing of Stockholm-based Nordea , the Nordic region's biggest bank, unless the country joins the proposed EU banking union, its finance minister was quoted as saying on Saturday.

Anders Borg also said Sweden wanted to ensure its taxpayers' money would not be used to rescue other countries' banks and saw little chance decisions on banking union could be made by the end of the year.

Sweden has already drawn up tougher bank regulation rules than other EU countries, seeking to protect itself against a crisis in the sector.

"As long as it remains that we are not participating in the banking union, it is unreasonable that we would be subject to the ECB's inspection, since we do not have a voting right," Borg was quoted by Finnish national broadcaster YLE as saying.

He spoke after Olli Rehn, European Economic and Monetary Affairs Commissioner, told YLE on Friday that a bank like Nordea would also be subject to ECB supervision as it operates in the sole Nordic euro member state, Finland.

"It is totally out of the question," Borg added, speaking at a meeting of EU ministers in Cyprus.

Swedish news agency TT quoted him as saying that the EU bank union proposals were an unacceptable shift in the balance of Europe's financial infrastructure.

"It is overall our view that it would unrealistic and inappropriate to have a timeframe where these decisions are made at the end of the year," he said.

"The point is that our taxpayers should not be affected by other countries' bank problems, that we should not be prevented from applying necessary requirements and rules on our big bank system."

He said Sweden had support among the 10 European Union countries which remain outside the euro zone.

"There are many countries which are worried. There are very few countries outside (the euro zone) which think that this is a balanced solution," he said.

The EU commission earlier this week announced a plan to give the European Central Bank primary responsibility for overseeing the euro area's banks and encouraged the broader European Union to participate in the regime.

Rehn was quoted by YLE as saying that Nordea would be covered by the rules as it was partly based in Finland.

EU finance ministers discussed the bank plan in Cyprus on Saturday. German reticence over how fast to centralise banking supervision was at odds with France, which urged prompt implementation of a plan. (Reporting by Jussi Rosendahl; editing by William Hardy)