* Regulator says bank cancelled free insurance incentive
* Fine 5.58 million levs ($4.3 million)
(Adds detail, background)
SOFIA, Oct 26 (Reuters) - Bulgaria's anti-trust body fined the local branch of Austria's Raiffeisen International for luring customers with free insurance incentives it later cancelled, the watchdog said on Monday.
The bank had offered free life insurance in 2004 through 2007 to mortgage customers without intending to maintain the policies, Bulgaria's Commission for Protection of Competition said in a statement.
It said the bank used the free insurance only as a means to attract clients, which damaged consumer interests as well as the interest of competitors.
A spokesman for the bank said Raiffeisen would comment on the 5.58 million lev fine later in the day.
Prior to the financial crisis, commercial banks in Bulgaria offered all kind of loans and bonuses as people rushed to buy new homes, cars and flat TVs after years of austerity under communism.
The commission fined Raiffeisen after one of its clients complained the bank had cancelled the insurance two years after taking a mortgage and had not informed him. The insurance was initially offered for the entire period of the mortgage, the statement said.
Raiffeisen is the fourth-biggest bank in terms of assets among the 29 banks operating in the European Union member.
Central Bank Governor Ivan Iskrov had often urged banks not to use misleading advertising to attract more customers.
In July, the Commission launched a probe into claims the Balkan country's banking sector operated a cartel that fixed interest rates and market share distributions. It has said the probe was complicated and might take over a year to complete. (Reporting by Tsvetelia Ilieva and Anna Mudeva, editing by Will Waterman)