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* Take-up rate of 70 pct would bode well for debt swap
* Participation rate seen high in Europe
By George Georgiopoulos
ATHENS, Sept 8 (Reuters) - Greek bankers said on Thursday that a 70 percent participation rate in a bond swap to buy Athens more time to emerge from a severe debt crisis would be enough to clinch a deal in October.
Athens has asked banks and insurers in 57 countries to say by Sept. 9 whether they intend to take its debt exchange offer, a key part of a second 109 billion euro bailout package it clinched in July to avoid bankruptcy.
Last month Greece turned the screws on investors, saying it may not go ahead with the debt swap if holders of less than 90 percent of the bonds take part in the scheme, which foresees an average 21 percent haircut on portfolios.
A day before the deadline expires for bond holders to express interest, officials would not confirm press reports of 75 percent take-up, slightly above the official 60-70 percent participation rate announced last month. But Greek bankers said this was no reason to worry about the deal.
"Even with a participation rate of 70 percent or better, which is my current view, the PSI (private sector involvement) will proceed," said an Athens-based banker close to the procedures.
Under pressure from European taxpayers, euro zone governments insisted the private sector share the burden of averting Greece's collapse before agreeing the new bailout.
Meeting the target will mean that 135 billion euros of outstanding Greek government bonds maturing by 2020 will be swapped or rolled over, giving Athens cash-flow relief and time to get its fiscal house in order.
There have been concerns a low participation rate could force reluctant euro zone partners to cough up more cash but the banker said there were other ways to make up the difference.
"At that rate, any shortfall can be covered by reallocating funds in the bailout package," he said, speaking on condition of anonymity.
The proposal aims to ease Greece's debt burden by swapping bonds with a maturity of up to 10 years for 30- or 15-year paper with additional guarantees, to make them less risky to hold than the original debt.
A source close to the procedures said the feeler by Athens on bondholders' intentions on the swap offer would show strong take-up in Europe, where the majority of Greek debt was sold for years.
"In Europe the take-up rate will eventually be high, 90 percent is not out of reach," the source told Reuters.
Another source close to the talks said on Wednesday it would take time to conclude the deal and roadshows were still taking place in Asia and America.
Greek and European lenders such as National Bank of Greece (NBGr.AT), France's BNP Paribas , Belgian group Dexia and Germany's Commerzbank are among the biggest holders of Greek bonds.
The International Institute of Finance (IIF), a global banking group that is leading the bond swap talks, said on Tuesday it was confident the plan would eventually win the necessary investor support. It had said in August take up was at 60-70 percent.
On Tuesday the head of the Greek debt agency said officials were pleased with progress, while he made clear no official announcement should be expected Sept. 9, indicating more time was needed for the deal. (Reporting by George Georgiopoulos; Editing by Dina Kyriakidou)