By Megan Davies

NEW YORK (Reuters) - The dispute over the $20 billion (10 billion pound) leveraged buyout of U.S. radio operator Clear Channel Communications Inc will go to trial in New York on May 5, or as soon after as can be scheduled, Justice Helen Freedman said in New York Supreme Court on Thursday.

The buyout has been rocked by a dispute between the banks set to finance the deal and the private equity buyers, Thomas H. Lee and Bain Capital.

The buyout firms claim the banks balked at providing financing when the debt markets deteriorated and asked for a change in terms of the buyout that prevented it from being completed. The banks were to have earned more than $400 million in fees.

The private equity firms filed complaints in New York and Texas last week against Citigroup Inc, Morgan Stanley, Credit Suisse Group, Royal Bank of Scotland Group Plc, Deutsche Bank AG and Wachovia Corp to force them to fund the deal.

Clear Channel joined them in the Texas suit, but is not a plaintiff named in the New York case.

The banks said in court Thursday they want to bring Clear Channel into the lawsuit brought against them in New York.

A lawyer for the banks, Guy Struve, from Davis Polk & Wardwell, told a hearing they planned to file an answer to the suit and counter claims on Friday that would add Clear Channel to the case in New York.

A spokesman for the banks said in an e-mailed statement: "We are pleased with today's outcome and hope through the claims that we will be filing tomorrow and our request for an expedited hearing in New York, which includes all relevant parties we can bring this matter to a rapid resolution."