* GM board of directors to discuss Opel fate on Wednesday

* German FinMin says GM must pay back loan if it keeps Opel

* German EconMin says talks to continue if GM picks no buyer

Germany's government would expect General Motors [GM.UL] to repay a 1.5 billion euro ($2.2 billion) state loan if the carmaker calls off the sale of its Opel unit following a board meeting on Wednesday, German Finance Minister Peer Steinbrueck said.

If General Motors' management decided to keep Opel we would make that conditional on repayment of that loan, Steinbrueck said.

GM has been in talks to sell Opel to either Canadian auto group Magna (MGa.TO) or Belgium-based financial investor RHJ (RHJI.BR), and sources close to the deliberations have told Reuters the company was now also considering keeping Opel.

German federal and state governments provided the bridge loan earlier this year to protect Opel from being swept into GM's brief bankruptcy.

Frustration with GM is mounting in the German government, which has come out strongly in favour of Magna's bid for Opel as it hopes the Canadian company's plans would safeguard the highest number of jobs in Germany.

Keeping Opel outright would involve raising funds to cover the loan as well as the costs of restructuring the money-losing operation, all of which could run to $6.1 billion, according to a report financial advisory firm KPMG presented to GM's board on Tuesday. [ID:nN08292095]

So far, Germany has ruled out aid to help GM keep Opel, after throwing its weight behind Magna. But Steinbrueck said on Wednesday a final decision depended on how much money GM was willing to put on the table. [ID:nBAT003137]

The outcome of Wednesday's board meeting is unclear. Analysts have said they believe GM will hold off on a decision until after the German election on Sept. 27, which is likely to produce a new centre-right government.

This would avoid embarrassing conservative Chancellor Angela Merkel and her left-leaning coalition partners, the Social Democrats, ahead of the vote.

Nonetheless, German Economy Minister Karl-Theodor zu Guttenberg said on Wednesday the upcoming elections were not putting pressure on talks.

I always made clear that the election dates cannot be tied to the negotiations as such. It would be absolutely cynical to do so and I will absolutely deny any (connection) to the election date, Guttenberg said.

Even if GM's board failed to make a decision on Opel's fate at its meeting, Berlin was prepared to continue talks with GM.

If there is a result tonight, it will be immediately discussed by the federal government and with those involved, and if necessary, negotiations will continue, Germany's Economy Minister Karl-Theodor zu Guttenberg told journalists on the sidelines of a banking conference.

We are ready for any negotiation situation because we have run through all the scenarios in the last months.

($1=.6898 Euro) (Reporting by Christoph Steitz, Jonathan Gould, Edward Taylor, and Matthias Sobolewski in Berlin; writing by Maria Sheahan; editing by Simon Jessop)

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