New guide aims to help firms raise funds privately across Europe

* New (KOSDAQ: 160550.KQ - news) guide aims to create pan-EU private placement market

* Initiative dovetails with EU's Capital Markets Union plan

By Huw Jones

LONDON, Feb 11 (Reuters) - New ground rules to help companies raise funds privately across Europe have been introduced as the EU financial industry seeks to reduce a reliance on banks and U.S. investors.

Banks are traditionally the main source of corporate funding in Europe, but EU officials want to increase how much cash for companies is raised from markets, to make the region less vulnerable to banking shocks like the 2008-9 global crisis.

They are also seeking to keep money within the European financial system so it can aid the economy - and want a pan-European approach to give companies a wider pool of investors, to allow the region to compete with the bigger U.S. market.

The new rules cover private placements, which are typically used by mid-sized companies and refer to securities like bonds sold privately to a select group of investors, or loans taken out from such groups.

The pan-European private placement working group, which groups several trade bodies, aims for its new guide for these transactions to become the main market reference, like similar templates for bond trades.

About 2.7 trillion euros ($3 trillion) of corporate debt will need to be refinanced by Europe's 200,000 mid-sized companies over the next four years, research from Standard & Poor's indicates.

The EU initiative, backed by the British government, the Bank of France and Bank of Italy, is all the more urgent as banks have been reining in lending as they focus on bolstering capital.

The guide lists the characteristics of a pan-European transaction, showing how it differs from other forms of debt, and setting out the roles and responsibilities of the borrower, investors and legal counsel. It also lists key requirements such as information disclosures and due diligence.

Currently, rules differ on a national basis.

Next (Other OTC: NXGPF - news) week the European Commission kicks off plans for a Capital Market Union aimed at making it easier for companies to raise cash to invest in growth and jobs.

"The guide ... is a key element to foster the development of a private placement market in Europe," French Finance Minister Michel Sapin said. "This should be one of the building blocks of the Capital Market Union."

The French and German domestic private placement markets issued about 15 billion euros of debt in 2013, the working group said, with a further 15.3 billion euros raised by European companies in the U.S. private placement market.

The group includes the International Capital Market Association, the Association for Financial Markets in Europe, the Investment Association and a French private placement body.

($1 = 0.8852 euros) (Editing by Pravin Char)