German finance minister Wolfgang Schaeuble warned that a veto of the Greek government's austerity plans by parliament this week could mean Athens will not receive a bailout tranche it needs to remain solvent.

If the package is rejected, which no one expects actually, then the prerequisites would no longer exist for the IMF, EU and euro zone countries to release the next tranche of aid, he told German Sunday newspaper Bild am Sonntag.

Athens needs to get its fifth slice of a 110 billion euro ($155.7 billion) EU/IMF bailout worth 12 billion euros, without which the country would be unable to cover pressing funding needs after July 15.

The stability of the entire euro zone would be in danger and we would need to quickly ensure that the risk of contagion for the financial system and other euro area countries would be contained, he said.

The Greek parliament is due to vote on Wednesday and Thursday on measures that include 6.5 billion euros worth of extra austerity steps for this year and savings of 22 billion euros for 2012-2015 to cut deficits and keep qualifying for EU/IMF aid. It also speeds up the sale of state assets under a 50 billion euro privatization program.

We are doing everything to prevent the crisis from escalating, but we must be ready for everything. That's our responsibility and we are preparing ourselves for that, he said.

I am confident that a majority can be found in the Greek parliament for the austerity package, Schaeuble added.

The PASOK part of Greek Prime Minister George Papandreou counts 155 MPs in a 300-strong parliament, but his already razor thin majority may be undermined by two announced defections.

In Bild am Sonntag, Finance Minister Schaeuble also said that he expected private sector creditors to participate willingly in a second bailout package, which is likely to be similar in size to the 110 billion euros of EU/IMF loans from May 2010 and should tide Greece over until the end of 2014.

Stabilizing the situation in Greece and bringing it under control is really in the absolute interest of all investors. Therefore the private sector doesn't need any additional incentives, Schaeuble said.

German banks, which say they have some 10-20 billion euros in exposure to Greece, have called for the state to guarantee their risk with taxpayer money should they participate in some form of a debt rollover.

ROLLOVER INTENTIONS

The industry association head of Germany's private lenders, Michael Kemmer of the BdB, told national daily Der Tagesspiegel that banks were pushing for better conditions since they had a fiduciary responsibility to their depositors.

Were it to come to a lengthening of the bond maturities, it must be certain that the debt would have a higher standard of quality, Kemmer said in comments to be published on Monday.

On Friday, a senior German banking source said domestic lenders were still examining a variety of proposals and that they would not agree to commit to any rollover deal without a signal from ratings agencies that there would be no default.

German private creditors have been asked by the Finance Ministry to submit spreadsheets with data on their Greek exposure and their intentions to roll over the debt by Sunday evening, two sources familiar with the meetings said.

Separately, Welt am Sonntag wrote that as of Friday banks were only offering to grant a one-year extension, instead of the five that the German government wanted.

Speaking to Bild am Sonntag, Schaeuble also said that he was confident his coalition could muster up the votes necessary to approve the creation of the European Stability Mechanism (ESM), the permanent fund to finance euro zone sovereign bailouts that goes into effect in 2013.

I don't have the slightest doubt that once the summer break is over the treaty over the European Stability Mechanism finds a sufficient majority in the Bundestag and Bundesrat, he said, referring to the upper and lower houses of parliament.

(Reporting by Christiaan Hetzner; editing by Sophie Walker)

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