UPDATE 1-Raiffeisen Upper Austria confident of passing euro zone banks' stress test
* CEO says sure lender will pass stress test
* Says bank taxes pushing lenders to breaking point
* Calls for government to let banks offset EU levies (Adds comments from news conference)
VIENNA, April 16 (Reuters) - Raiffeisen Landesbank Oberoesterreich AG (RLB OOe) is confident it will pass a stress test for big euro zone banks this year after boosting its capital solvency ratios in 2013 and scaling back its balance sheet to cut risk, its chief executive said.
The Raiffeisen bank for the province of Upper Austria is one of the six Austrian lenders due to come under the direct supervision of the European Central Bank from November.
Heinrich Schaller said "no", when asked if there was any danger the group could fail the stress test to accompany an ECB-led health check on banks' balance sheets.
He said a discussion with supervisors on how to value banks' collateral in the asset quality review was continuing and it was still unclear what the final rule would be, but added, "We don't have a capital gap and wouldn't have a capital gap."
The group's core capital adequacy ratio under Basel II banking industry standards rose by a full percentage point to 9.8 percent of risk-weighted assets in 2013. It said the group's capital ratio would improve under Basel III rules and IFRS accounting.
He told a news conference he was "very satisfied" with events in the first quarter, when demand for credit picked up.
RLB OOe is the third-largest shareholder of Raiffeisen Zentralbank, the unlisted parent of Raiffeisen Bank International.
The RLB OOe group's total assets fell 6 percent last year to 37.4 billion euros ($51.7 billion) as it scaled back on lending risk.
Group operating profit under IFRS accounting rules rose 2.8 percent to 422.6 million euros, while loan provisioning more than halved to 145.9 million.
The bank was in the news this month when Schaller threatened to move its headquarters across the border to Germany in a growing row with the government over a bank levy which lenders say is too onerous.
Schaller said again on Wednesday that Austrian banks' competitiveness was at risk under a domestic bank levy that costs big lenders 640 million euros plus a 300 million-euro hit for financing new European funds to cover the costs of winding down ailing banks and insuring deposits.
He said talks with the government next month should at least let banks offset their European contributions from the levy they now pay Austria to help cover bailout costs to taxpayers.
RLB OOe said up to 25 outside auditors and two experts from the Austrian central bank would comb through nearly 54 percent of its loan book by the end of July under the ECB health checks.
This review would cost around 4.5 million euros and the stress test another 1 million. It called such high costs unjustified and questioned whether the checks would make the banking system any safer.