* EU Parliament set to agree on review of banking rules by mid Oct
* Higher guarantees for savers may expose bonds to more risks
* Italy, Portugal seen opposing move over fear of weakening banks
By Francesco Guarascio
BRUSSELS, Sept 27 (Reuters) - European Union lawmakers are considering changing the rules on bank rescues to ensure bondholders' investments are used to prop up a failing lender ahead of savers' deposits, EU officials said.
The discussions follow a decision by EU regulators to shut down Spanish bank Banco Popular in June after a run on its deposits fuelled by fears that depositors' money could be used to rescue the lender.
But the proposed changes could expose investors who hold bonds issued by banks to higher risks should they run into trouble, and generally push up yields on lenders' senior debt, making it more expensive for them to raise funds.
Any changes agreed by the European Parliament would have to be approved by governments of the bloc's members states.
One EU official, who declined to be named, said Italy and Portugal opposed the idea, fearing it would make it harder for banks in the countries to increase their capital reserves to levels required under EU rules, an EU official said.
During the global financial crisis, taxpayers in a number of EU countries had to fund bailouts for banks which came close to collapse. Since then, the bloc has tightened capital adequacy stipulations and introduced "bail-in" rules, under which shareholders, bondholders and depositors would bear responsibility for funding future bank rescues before taxpayers.
Banco Popular's liquidity crisis was partly prompted by the new EU rules that allow regulators to wipe out uninsured savings, deposits above 100,000 euros ($118,000).
To prevent panicking depositors from hastily withdrawing money in the next bank crisis, lawmakers are discussing changes that would increase the level of protection given to savers, making them the last to be hit in a future rescue.
Under current rules, uninsured depositors have the same level of protection as holders of senior debt.
"Conferring a priority ranking on all deposits is expected to enhance the implementation of the bail-in tool," said a proposal prepared by Ernest Urtasun, a Spanish Greens member of the European Parliament. The document said this would lower the risk of contagion - the kind of loss of investors' confidence which spread rapidly from market to market during the crisis.
The document seeks to amend a legislative proposal by the European Commission on the ranking of unsecured creditors in bank rescues. This adds a new category of liabilities that would be hit before depositors and after shareholders and junior creditors.
Two EU officials familiar with talks on the issue said the amendment could be approved by mid-October by the parliament's economic committee.
But, as a compromise, states could be given discretion on how to treat depositors. "Discussions are still ongoing and all options are open," one official said.
Italy and Portugal are against increasing depositors' protection, fearing a negative impact on bondholders, the EU official said, adding that other states may also oppose the move.
In Italy, retail investors often hold much of a bank's senior debt, and the government has faced mass protests when it imposed losses on bondholders during bank rescues.
In the recent rescue of two small banks from the Veneto region, the government managed to win EU approval to use taxpayers' money rather than involve senior bondholders in a bail-in as part of a rescue package.
An Italian official in Brussels declined to comment.
The shutdown of Banco Popular prompted debate among EU regulators on whether to exclude depositors from bail-ins altogether, but this bolder option has lost ground as it would leave banks without sufficient capital to be wiped out in a rescue. ($1 = 0.8481 euros) (Reporting by Francesco Guarascio @fraguarascio; editing by David Stamp)