German states agree to consolidate Landesbanks

* Consolidation by end of 2010

* Agreement opens way for Landesbanks to tap "bad bank" plan

* Cabinet due to agree Landesbank bad bank plan next week

(Adds draft law on "bad bank" plans)

By Matthias Sobolewski and Paul Carrel

BERLIN, June 4 (Reuters) - Germany's states agreed to consolidate the regional Landesbank sector by the end of 2010, allowing the publicly-owned lenders to take part in a so-called "bad bank" plan to rid themselves of toxic assets.

North Rhine-Westphalia's state premier said on Thursday the consolidation would include cuts to the number of Landesbank sites, but gave no details. Chancellor Angela Merkel's cabinet would agree on the Landesbank bad bank model next week, he said.

The financial crisis has given Berlin more leverage to press its case for consolidation in the Landesbank sector -- a push it has made for years but which has met resistance from German states, whose leaders want to avoid job losses in their regions. "We have agreed that by December 31, 2010 significant consolidation steps must be implemented," North Rhine-Westphalia premier Juergen Ruettgers told reporters, adding the move aimed to introduce "more efficient structures".