UPDATE 2-Volksbanken post steep loss, may skip 2010 dividend

* Pretax losses soar to 468 mln euros in Q3

* Can't promise 2010 coupon payments on certain instruments

* Sees more charges, higher risk provisions in Q4

* Sees profit in 2010

(Adds no coupon and dividend payments in 2010, background)

By Sylvia Westall

VIENNA, Nov 6 (Reuters) - Austria's cooperative banking group Oesterreichische Volksbanken AG (OTVVp.VI) reported a half-billion euro third-quarter loss and said it expects more charges and higher risk provisions next quarter.

Bad loan provisions took their toll on Austria's No.4 lender, which posted a 468 million euro ($695 million) pretax loss in the three months to September, more than three times bigger than the loss it suffered in the first six months.

Volksbanken, which already cancelled 2009 coupon and dividend payments on some capital instruments, said it could not promise to make those payouts for the 2010 business year even though it expected a profit for 2010.

"In the fourth quarter there will be further charges from the revaluation of assets as well as higher risk provisions, but in a smaller amount than in the third quarter," the bank said in a snap earnings statement.

The bank will sell assets and cut costs to return to profits in 2010, new Chief Executive Gerald Wenzel said in a statement.

A spokesman for Austria's financial watchdog, FMA, said that the loss was within expectations and, so far, the bank had not dropped below legal capital requirements. Volksbanken said its Tier 1 capital ratio stood at 8.5 percent by end-September.

"Should the bank drop below the higher capital requirements now expected by the capital markets, there is enough room to manoeuvre left in the Austrian banking stability package," the spokesman said.

Volksbanken received a 1 billion euro capital injection from the Austrian government earlier this year. Austria's 100 billion euro banking package includes 15 billion euros for possible capital injections, of which less than half was used so far.

Last year, Volksbanken lost its stake in municipality lender Kommunalkredit [KKAT.UL] when Kommunalkredit was nationalised to prevent a looming collapse.

On July 24, Moody's downgraded Volksbanken's credit ratings sharply, to Baa1 from Aa3 after the bank said it could not not pay dividends and coupons on certain securities, including the state capital.

Regional Austrian cooperative banks own 58 percent of Volksbanken. German cooperative group DZ Bank (DGBGg.F) owns 25 percent, a unit of reinsurer Munich Re (MUVGn.DE) 10 percent, and another Austrian cooperative bank, RZB [RZB.UL], the rest. ($1=.6734 EURO) (Additional reporting by Boris Groendahl; Editing by Simon Jessop)