* H1 group loss 87 mln eur vs year-ago profit 14 mln
* Sets aside 60 mln euros for Romanian unit
* Tier 1 capital ratio rises to 11.4 pct
* Reiterates sees 2013 loss (Adds details and background)
ALPBACH, Austria, Aug 29 (Reuters) - Partially state-owned Austrian lender Volksbanken AG swung to an 87 million euro ($116 million) first-half loss as it carried out a drastic European Union-mandated restructuring process, it said on Thursday.
The bank also said it had set aside 60 million euros to help shore up its Volksbank Romania unit.
Its tier 1 capital ratio rose to 11.4 percent at the end of the first half from 10.9 percent at the end of 2012 and its capital buffer improved slightly as a result of the downsizing process, it said.
"The massive deleveraging process will continue to affect results, it is therefore to be expected that VBAG Groups results for the full year 2013 will be clearly negative," it added. It had already forecast a loss this year.
Austria took a 43 percent stake in the bank last year as part of a rescue that cost taxpayers more than 1 billion euros in writedowns on previous aid, fresh capital and guarantees.
The restructuring plan required Volksbanken to wind down or sell 10 billion euros of non-core operations. Its total assets stood at 24.9 billion euros at the end of June, 2.8 billion less than at the end of 2012.
Volksbanken shrank its balance sheet by nearly a third in 2012 by selling assets including its eastern Europe arm VBI.
Volksbanken still needs to sell its 51 percent stake in its deconsolidated Romanian banking business - which it has entirely written down - by the end of 2015, as well as its 50 percent stake in VB Leasing International by the end of 2014.
$1 = 0.7496 euros Reporting by Michael Shields; editing by Georgina Prodhan