FRANKFURT (Reuters) - German regulator Bafin has set an end of August deadline for investors to submit information needed to approve Deutsche Bank's (>> Deutsche Bank AG) sale of BHF to a consortium headed by RHJ International (RHJI), two people familiar with the process said.

The consortium originally agreed to buy the Frankfurt-based lender from Deutsche Bank in March 2012, only to see Bafin refuse to approve the deal, citing concerns about BHF's ability to withstand a crisis on a standalone basis.

RHJI beefed up its offer in September 2012 by bringing in more investors including China's Fosun Group (>> Fosun International Limited), BMW (>> Bayerische Motoren Werke AG) heir Stefan Quandt, and funds controlled by U.S. investor Timothy C. Collins and Blackrock.

Bafin has been evaluating the consortium since.

One of the people familiar with the approval process said on Friday that Bafin had asked asset manager Blackrock (>> BlackRock, Inc.), which is part of the consortium, to provide details about how they would support BHF in a crisis.

A key concern is whether Blackrock would take part in a capital increase in the event that further funds need to be provided to support BHF, another person familiar with the matter said.

"The regulator doesn't want another problem case," the person said.

RHJI, Blackrock and Deutsche Bank all declined to comment.

A Bafin spokesman declined to comment on whether there was an ultimatum, but said: "We do not have all of the required information. Therefore we cannot evaluate this case."

A successful sale would reduce Deutsche's risk-weighted assets by about 2 billion euros ($2.65 billion), and result in capital gains of around 75 million euros, analysts at Espirito Santo Investment Bank said.

Deutsche Bank has been on the lookout for a buyer since it inherited BHF with its 1 billion euro purchase of Sal. Oppenheim in March 2010. Since then headcount at the lender, which has wealth management, asset management and investment banking operations, has been reduced to around 1,100 from 1,500 staff.

The regulator also scotched Deutsche Bank's initial plan to sell BHF to LGT , a bank owned by the royal family of the Alpine principality of Liechtenstein.

(Editing by Maria Sheahan and Patrick Graham)

By Alexander Hübner and Edward Taylor