UPDATE 1-Spanish bad bank adds foreign insurers to investor list

* Generali, Zurich to invest 5 mln euros each

* Bad bank must raise 5 bln euros in private capital

* Barclays, Deutsche Bank, Axa have also signed up (Updates with confirmation from Sareb, new details)

By Sarah White and Jesús Aguado

MADRID, Feb 13 (Reuters) - Generali and Zurich are among insurers that will invest in a Spanish bank set up by the government to manage toxic property assets, as it raises fresh capital.

The "bad bank," known as Sareb, said in a statement on Wednesday that it was close to raising the 4.8 billion euros ($6.45 billion) in private capital it needs to handle another intake of soured assets.

Sareb was set up as part of a 40 billion-euro European bailout of Spanish lenders that were laid low by a property crash five years ago.

It got going with about 3.8 billion euros of capital, split between 25 percent shareholder equity and 75 percent subordinated debt, after seizing 37 billion euros of troubled real estate assets from four nationalised lenders last year.

Italy's Generali and Switzerland's Zurich will invest 5 million euros each in the bad bank, two sources earlier told Reuters. Sareb said the two insurers, along with Spanish peers Santa Lucia and Reale, would be subscribing to subordinated debt in the coming weeks.

Spanish utility Iberdrola, meanwhile, has now become a shareholder along with a roster of healthy Spanish banks, Sareb said. It is contributing 2.5 million euros to Sareb's equity, although a source earlier said Iberdrola's could invest 10 million euros in total in capital, which would include subordinated debt too.

Though foreign firms are only providing a fraction of Sareb's capital - mainly provided by healthier Spanish lenders such as Santander - Spain has been keen to attract international investors, in part to lend credibility to Sareb.

Britain's Barclays, Germany's Deutsche Bank and French insurer Axa, which also have a big presence in Spain, invested in a first phase of capital raising at the end of last year and are shareholders.

Sareb did, however, rebuff interest from three international funds recently because they were asking for special terms.

BBVA STEERS CLEAR

Sareb is raising capital again to prepare for the transfer of assets at the end of February from four mid-sized Spanish banks, valued at 15 billion euros.

Those will bring total assets under Sareb's management, like soured loans to developers and housing, to just over 52 billion euros.

Spain needs to keep private capital in Sareb at over 50 percent to reduce the burden on public finances - a target Sareb said it had achieved.

BBVA is the only Spanish bank that has so far refused to invest, generating intense speculation in Spain over its motivations, when other banks were seen to be participating mainly to help the country overcome its banking problems.

BBVA's Chairman Francisco Gonzalez has only said that the bank chose not to invest for "technical" reasons.

Sareb has already started selling assets, releasing 13,000 of properties on the market earlier this month. But many aspects of its structure, including servicing agreements for the assets, still need to be completely nailed down, and it is also in the process of revising its business plan.

($1 = 0.7427 euros) (Editing by Clare Kane and Tom Pfeiffer, Gary Hill)

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