LONDON, Dec 2 (Reuters/IFR) - Europe's banks are scrambling to tap every last available source of funding, including through their retail customers, as they stock up on securities they can use to access the central bank liquidity they will need to lean on for many more months.

Fresh measures to flush banking systems with dollar liquidity do not tackle the broader euro funding shortages most of Europe's banks still face, as many find themselves shut out of mainstream bond markets.

It's amazing no bank has fallen over already when there are so many living hand-to-mouth, one senior financing banker said.

Banks usually rely on one another for the money they need to finance their day-to-day needs.

But as the crisis in the euro zone has deepened that source has dried up, and banks are having to lean on the European Central Bank (ECB) for funding, or seek more innovative ways to raise money and collateral. Long term funding is a particular problem as the ECB only provides funds for up to a year.

Some banks have for instance taken to selling more bonds through their retail branches, where they can still find willing supporters. In Italy and Spain, where there is a greater culture of selling such deals, it is an option that is gaining traction.

Barcelona-based Caixabank said on Wednesday it planned to raise 3 billion euros (2.6 billion pounds) of four year senior debt through its retail network, substantially bigger than similar issues in recent years.

Banks are leaning on their retail customers in other ways too. Spanish banks have waged a deposit war, and even in crisis hotspot Portugal, where banks are heavily reliant on the ECB, lenders have managed to increase deposits to record levels.

In Greece, however, where banks have lost access to practically any form of financing via markets, even deposits are no longer a reliable funding pillar, and outflows picked up pace in recent weeks.

There is a limit to what you can take out of retail, one senior debt banker warned. Also, regulators are getting wise to the deposit wars. Retail investors won't solve banks' funding crisis, unless perhaps in Italy where they can really move the needle.

RETAINED BONDS

Although long term wholesale markets are jammed up, banks can a still lure institutional investors into some deals that are structured in the right way -- those that have high enough interest rates and which are backed by some form of security.

Covered bonds, for example, which are backed by cash flows from pools of mortgages or public sector loans, became increasingly popular this year.

Securitisations are also being used, with Santander's UK business this week sealing 1.2 billion pounds in residential mortgage-backed securities.

Banks are also returning to techniques used in 2009, such as retained covered bonds. These are not sold to end investors but hoarded by the bank so they can be sold quickly to the ECB if needed to access short-term funds via so-called repurchase, or repo, operations.

Portuguese banks have already been heavy users of these and bankers predict usage will grow next year. EBS Building Society issued 1.4 billion euros of these last week.

Bankia, a mid-sized Spanish lender, on Tuesday registered to issue 3 billion euros in mortgage-backed securities that it plans to keep for itself in case it needs to deposit them at the ECB as guarantees.

Banks are also turning to other platforms like Eurex Repo, an international marketplace for electronic repo trading and secured funding and part of Deutsche Borse Group.

Caja Madrid, now Bankia, was the first to join up last year and the platform now has four Spanish banks as member.

The banks are calling us with a view to joining because we are one of the few ways they can still fund themselves, a spokesman for Eurex said. We have more banks joining us than we ever thought we would.

Repurchase operations involve selling securities along with an agreement for the seller to buy back them back a later date.

GUARANTEES A NO-GO

Like Bankia's transaction, many new deals are still geared towards allowing banks to access central bank or emergency funding, and this dependence is unlikely to lessen until the sovereign debt crisis itself clears, bankers said.

Many are hoping for other moves from central banks and policymakers in the coming weeks that could help ease the funding crunch, although some of the tools used at the height of the 2008 financial crisis may no longer be of use.

Potential government guarantee schemes to back bank bond issuance for instance could be a flop now that investors concerns are actually centred on sovereigns.

National guarantees won't work in all cases, we are in a completely different environment from 2008, said Siddharth Prasad, head of EMEA financial institutions global finance at Nomura.

Those who want to use them won't be able to while those who can use them won't want to. The only thing they might achieve is to create more ECB eligible collateral.

Prasad said there would be an increase in bespoke funding transactions but that was very concerned about the liquidity backdrop and the continued strains in dollar funding.

The ECB could also broaden the range of collateral it accepts, industry sources said, easing fears that banks could run out of the right type of securities they need to tender.

(Additional reporting by Alex Chambers in London and Jesus Aguado, Sonya Dowsett and Carlos Ruano in Madrid; Editing by Jodie Ginsberg)