Three suitors in race for Hypo's Balkans business - sources
* Bulgarian group is backed by Russian bank VTB - sources
* Russia's Expobank in hunt after Czech purchase - sources
* Advent International, EBRD team up for bid - sources
By Michael Shields and Angelika Gruber
VIENNA, July 8 (Reuters) - Three main suitors are in the running to buy the Balkans network of nationalised Austrian bank Hypo Alpe Adria, a deal that could be signed before the end of July, several sources close to the sale told Reuters.
Hypo's network in southeast Europe is considered its prime asset. The bank, nationalised in 2009 to avoid a collapse that would have sent shock waves through the region, is winding down its other businesses.
Austria is creating a "bad bank" to absorb most other Hypo assets in a step that will boost state debt and the budget deficit this year.
One of the potential buyers for the Balkans network is a group of Bulgarian investors that includes businessman Tsvetan Vassilev and associates, who are backed by Russian bank VTB , two sources said.
Vassilev, one of Bulgaria's most prominent businessmen, is the main owner of Bulgaria's Corpbank, which the central bank temporarily seized after a bank run last month.
Vassilev could not be reached for comment. His former spokeswoman at the bank said she was no longer in contact with him and could not forward queries. VTB had no comment.
Russian businessman Igor Kim's Expobank, which in January bought German bank Landesbank Baden-Wuerttemberg's Czech business, is also in the race, several sources said.
It declined to comment.
And financial investor Advent International has teamed up with the European Bank for Reconstruction and Development (EBRD) to bid, the sources said. Both declined to comment.
The European Commission last year ordered Vienna to find a buyer for the Balkans network by mid-2015 in return for approving state aid for the lender.
Deutsche Bank, which is handling the sale on behalf the government, declined comment, as did Hypo and the finance ministry.
Finance Minister Michael Spindelegger told parliament on Tuesday that a deal could be signed within weeks and seven bidders were interested.
The seven include bidders who want only parts of the network, which Austria would prefer to sell en bloc, people close to the transaction said.
Hypo's southeast Europe network comprises six banks and three leasing operations in Slovenia, Croatia, Serbia, Bosnia and Montenegro.
Valued on Hypo's books at around 500 million euros ($682 million) after writedowns last year, the unit lost 286 million euros in 2013 after booking 340 million euros in risk provisions.
It had 8.6 billion euros in total assets, a 6.4 billion loan book, 4.1 billion in deposits and a non-performing loan ratio of 12.3 percent at the end of last year. ($1 = 0.7331 euros) (Additional reporting by Arno Schuetze in Frankfurt, Marc Jones and Freya Berry in London, Tsvetelia Tsolova in Sofia, and Megan Davies and Oksana Kobzeva in Moscow. Editing by Jane Merriman)