* Coene says rate cuts, LTROs option for ECB
* Doubts QE chances, warns Spain on borrowing costs
* Hints at ECB debate on taking Greek losses
By Marc Jones
LONDON, Sept 17 (Reuters) - The ECB could cut its main interest rate, put its deposit rate into negative territory and offer banks a new round of ultra-cheap funding, policymaker Luc Coene said on Monday, adding Spain's borrowing costs would soar again without a support programme.
ECB Governing Council member Coene said it was "very unlikely" that the ECB would ever engage in outright quantitative easing but that the central bank had a number of other options to ease monetary policy if required.
"You could further lower interest rates, you can also try to extend the LTROs to some extent, you can also do some LTRO with private credit claims as collateral," he said during a seminar organised by the European Economics and Financial Centre.
A handout of cheap long-term funding linked to credit claims would be a move to try and tempt banks into new lending.
Asked on charging banks to deposit cash at the ECB overnight he added: "That is certainly one of the options, that is not at all excluded."
Coene is the head of the Belgian central bank, a position which brings with it a seat on the ECB's 23-member Governing Council.
The ECB's vow to buy potentially unlimited amounts of Italian and Spanish bonds if the countries admit themselves into fiscal rehab programmes has seen a dramatic reduction in the market turmoil which was threatening the euro's future.
Coene said the ECB would not lose the appetite for the purchases as it did for its Securities Markets Programme because they were now directly tied to countries submitting themselves to fiscal rehabilitation programmes.
He said the ECB would make its own decisions on whether a country was sticking to its promises. "We could turn the purchases on and off instantly overnight," he said, adding the Governing Council would not be rely on politicians' views.
Spain's borrowing costs were also likely to jump again if it tried to avoid taking an politically unpopular aid programme.
"If Spain does not submit to a conditionality we will not buy its bonds... I don't think it will take long for Spanish spreads to rise if Spain does not do that (submit to programme)."
Coene also stressed that the ECB would take losses on any bonds bought under its new programme, known as Outright Monetary Transactions (OMT). He also refused to rule out the ECB swallowing loses on its Greek bonds.
"President Draghi has made it clear that for the OMT we will not apply the seniority rule that was applied for the SMP, that is also the reason we mark-to-market the bonds we buy on our balance sheet."
"The past is still an open question and we will see how this one plays out," he said referring to the bank's Greek bonds.