Morocco's BMCE bank counters real estate crisis

* Morocco's key real estate sector healthy

* Sector hit by "psychological crisis"

* Whole economy to expand despite downturn

CASABLANCA, April 23 (Reuters) - Morocco's second-largest private bank, BMCE (BMCE.CS), signed deals on Thursday with the country's largest real estate developers to try to shield the key sector from the global economic downturn.

The real estate boom was the engine of growth in the past five years.

But investors worried the impact of the global economic crisis would wither growth and affect others sectors such as construction and the stock market, where real estate companies underpinned the bourse's good performance.

Housing Minister Taoufik Hejira said real estate was hit by a "psychological crisis" caused by the global turmoil.

"The (real) estate market is healthy with strong fundamentals. There is no real crisis in the business. It is just a psychological crisis," he told Reuters on the sidelines the signing ceremony.

Under the deals with the developers, including Addoha (ADH.CS) and CDI, the real estate arm of Morocco's biggest state fund CDG, BMCE will keep credit flowing and guarantee loans for middle class buyers.

"The government would provide a 50 percent guarantee for the loans and the bank would guarantee the other 50 percent to keep the real estate on the track of growth," Hejira added.

Other banks are expected to follow BMCE to try to ward off the impact of the crisis, officials said. BMCE has a 24 percent share of the country's real estate loans.

"The measures adopted by BMCE bank target the middle class, which constitutes the backbone of the stability of our society," BMCE Chairman Othman Benjelloun told the gathering.

BMCE unveiled a financial product named Salaf Damane Assakane (housing guarantee loan) for middle class houses costing 800,000 Moroccan Dihrams ($93,730) or six times the average low-income price.

STRONG POTENTIAL

The government launched a programme to sustain real estate growth, including a scheme to eradicate slums in the main cities to help fight poverty and radical Islamists.

Eleven suicide bombers from Casablanca's slums killed themselves and 34 others in 2003, jolting the government into tackling poverty and other social problems.