* IMF tests in UK, Sweden, Netherlands, Germany, Luxembourg
* New EBA stress tests to tighten capital definition -source
* EBA test details seen determined by end-Feb -source
* S&P finds more than 30 top banks have insufficient capital
(Adds source details on EBA stress tests)
By Philipp Halstrick and Steve Slater
FRANKFURT/LONDON, Jan 19 (Reuters) - The International Monetary Fund is running a health check of top banks in Britain, Germany and three more countries just as Europe hammers out details of its own tougher industry "stress test".
The round of IMF health checks in Europe will start in Britain, three sources told Reuters, to be followed by Sweden, the Netherlands, Germany and Luxembourg.
Separately, the European Banking Authority (EBA) plans a tougher test of Europe's banks than a health check last year, which was slammed for finding only a small capital shortfall just before spiralling problems at banks forced an international bail-out of the Irish government.
The EBA's test will be based on a capital definition close to core Tier 1, rather than the less-strict Tier 1 ratios used last year, a person briefed by German regulators said.
The number of banks tested will be similar to last year's 91.
The EBA declined to comment, saying details are still being discussed. The German source said the final list of participants and scenarios will be determined by the end of February, and by mid-April the results will be sent to national regulators. The EBA is expect to publish the result at the end of June, the source said.
The tests come as a rating agency study found more than 30 of the world's top banks -- including Credit Suisse, Bank of America and Mizuho Financial -- have insufficient capital to withstand a big problem.
Standard & Poor's said most banks had improved their capital adequacy in the past two years but many still fell short and the risk-adjusted capital (RAC) positions of banks was "generally a rating weakness".
IMF TESTS
The IMF's Financial Sector Assessment Programs, or FSAPs, are in-depth analyses of a country's financial sector and were made mandatory in September for 25 "systemically important" countries, in a move to forestall another global crisis.
The test of Britain's top banks, including HSBC, Barclays and Lloyds Banking Group, is expected to take several weeks, the sources said.
Tests in all five countries will be conducted in the first quarter of this year, the IMF spokesman said.
"We haven't had an FSAP for quite a number of years. It is appropriate to do this given a number of things have changed in terms of our financial structure, since IMF last did full FSAP here," said Jonas Niemeyer, the Swedish central bank's head of policy and analysis division.
"We're looking forward to an external assessment of any problems that we may have and we see such an assessment as being potentially a very important, useful tool. It is always good to have a second opinion. Is our system fit and proper or not?"
The EBA's process is expected to include a liquidity test, which was missing last year.
The heads of Italy's two biggest banks, UniCredit SpA Chief Executive Federico Ghizzoni and Intesa Sanpaolo SpA CEO Corrado Passera, welcomed a new focus on liquidity in the new tests by Brussels.
"They definitely will be on capital and on liquidity. They are two very important components, even though for me liquidity is almost more important than capital," Ghizzoni told reporters on the margins of a meeting in Rome.
In its study, S&P found the average RAC ratio for the banks was 8 percent at the end of June 2010, up from 6.7 percent a year earlier, S&P said.
Germany's Commerzbank, Austria's Raiffeisen and Japan's Mizuho Financial ranked near the bottom of the study, each with RAC ratios of less than 5 percent.
Also faring badly were Credit Suisse and the Canadian Imperial Bank of Commerce -- both at 5.8 percent. Deutsche Bank, Lloyds, Bank of America and Citigroup had RAC ratios of below 7.5 percent.
Banks in Japan and Austria had the lowest average ratios, while lenders in Australia, Singapore, Hong Kong and the Nordic countries had the highest.
(Additional reporting by Mia Shanley in Stockholm, Stefano Bernabei in Rome and Edward Taylor in Frankfurt; Editing by Douwe Miedema, David Cowell and David Hulmes)