* Bankia is analysing merger with Popular - economy minister
* Popular says other lenders have shown interest
* BBVA, Santander, Sabadell, Caixa looking at Popular - sources (Adds comments from Spain's Economy Minister, details)
By Jesús Aguado and Angus Berwick
MADRID, May 16 (Reuters) - Several Spanish banks, including state-owned Bankia, have shown interest in a potential merger with Banco Popular, as its new management considers options for how to cope with billions of euros in toxic assets.
Popular's new chairman Emilio Saracho, brought in in February, has said he would consider a merger as the solution to the bank's 37 billion euros ($41 billion) of non-performing real estate assets, the highest among Spanish banks.
Spanish banks have already undergone huge consolidation since the country's financial crisis, with just 14 left from 55 in 2008, but Popular remains the weak spot since it has been unable to sell off its assets fast enough.
Popular, Spain's sixth largest bank, said on Tuesday that all groups had to declare preliminary interest in a merger by Tuesday evening. Any such declarations were not binding but were needed for it to analyse its options, it said in a statement.
A source familiar with the deal said all the big Spanish banks had been looking over the past weekend at Banco Popular's balance sheet before potentially expressing their interest.
"We have all been looking at risk files, at different samples of assets, including foreclosed assets, and commercial data and now we have been asked to put in a price and structure for the deal," this source said.
Spain's economy minister said on Tuesday that Bankia was one of several Spanish banks analysing a potential merger with Popular.
Analysts say a merger between Popular and Bankia would be complementary and create a domestic giant that would rival Spain's three largest banks: Banco Santander, BBVA and Caixabank.
Bankia, Spain's fourth largest bank, has bounced back from huge losses on property assets after they were transferred to an external 'bad bank' backed by the state, and now has the highest core capital ratio among listed lenders.
Spanish banking sources said Santander and BBVA were looking at Popular, and both banks' chief executives said during their last results that they would analyse opportunities in their home market, though both said they were focused on organic growth.
Two banking sources said that BBVA had approached former Banco Popular chairman Angel Ron in November about a potential tie-up. Representatives for Santander and BBVA declined to comment.
A Popular spokesman said the bank had hired JPMorgan and Lazard to advise it on its strategic options, which include either a merger or another capital increase after it raised 2.5 billion euros last year.
Popular shares have fallen around 62 percent over the past year and are the worst performers on the European STOXX banking index, which analysts say could encourage potential competitors to make an offer given its cheap price.
Bankia is unable to close deals until June due to restrictions on acquisitions from its 22-billion-euro state bailout in 2012, but a spokeswoman said it could express interest beforehand.
"Bankia is an important entity, which is very healthy, has a lot of capital and a good management team. The information I have is that it is analysing Banco Popular's situation, like the others," Economy Minister Luis de Guindos told reporters in Barcelona.
Caixabank and Banco Sabadell, which have both made informal approaches to Popular in the past, say they are now focused respectively on integrating Portuguese lender BPI and British TSB.
However, last week Saracho, Popular's chairman, asked Sabadell to look again at Popular's balance sheet in case it was interested, according to a source familiar with the situation.
Caixabank and Sabadell representatives declined to comment.
Popular has undergone three leadership shake-ups since last July and reported a 3.6-billion-euro loss for 2016. Earlier this month it said it was looking at selling off its non-strategic assets to boost its capital, although analysts say this is probably not enough to cover the shortfall. ($1 = 0.9038 euros) (Additional reporting by Andres Gonzalez in Madrid and Pamela Barbaglia in London; Editing by Sarah White/Keith Weir/Susan Fenton)