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LUXEMBOURG, June 20 (Reuters) - Richer western EU states locked horns with their poorer eastern peers on Tuesday over who should host the bloc's London-based regulators for banking and drugs after Brexit.
Several of the 27 remaining EU states have already signalled they could take on the European Banking Authority (EBA) and the European Medicines Agency (EMA) - bodies that together employ more than 1,000 people.
"This is a difficult discussion because for the first time since the Brexit decision, this theme is actually dividing the 27 whereas so far our strength in facing Brexit has been in our unity," one senior EU diplomat said.
"Eventually it will be a political decision with a lot of horse-trading behind the scenes."
Arriving at an EU ministerial meeting on the matter on Tuesday, Luxembourg's Foreign Minister Jean Asselborn made a play for the EBA, saying his country was already a European financial hub.
Germany and Ireland have already said they would apply to host both bodies, though diplomats say they would not go to any single country.
The newer member states in the east of the bloc who have joined since 2004 say they host fewer common EU bodies and want this disparity addressed.
Officially the meeting in Luxembourg is focused technicalities - ministers will work out a procedure for deciding the agencies' location. Those rules will be finalised and endorsed when EU leaders meet for a summit in Brussels on Thursday and Friday.
The bloc's executive European Commission would then prepare criteria for the choice though, diplomats said, some ministers wanted the Brussels-based EU political capital to go further and assess potential candidates, or even draw up a shortlist.
Barcelona, Milan, Copenhagen and Dublin have all started campaigning to host the EMA, which has an annual budget of $360 million.
Frankfurt, Paris, Amsterdam, Vienna, Lyon and Strasbourg are among the cities wanting the EBA, whose 160 London-based employees write and coordinate banking rules across the bloc.
EU officials said the bloc would have to consider a range of criteria including logistical support and infrastructure, though eastern states have said that would favour the wealthier west.
One of the proposed criteria would ensure geographical spread.
Countries have until the end of July to propose cities before EU states vote, first on the medical, then on the banking authority. A senior EU official said the final decision was expected in October. (Additional reporting by Alastair Macdonald; Writing by Gabriela Baczynska; Editing by Andrew Heavens)