FRANKFURT, June 13 (Reuters) - France could exit the

Franco-German tank project MGCS, the CEO of Rheinmetall

, one of the initiative's shareholders, was quoted as

saying on Saturday, in what could be the latest blow to defence

cooperation on the continent.

"There is always a risk, but nothing has been decided yet,"

Armin Papperger told Welt am Sonntag, commenting about the

project in which Franco-German tank maker KNDS and French group

Thales also hold stakes.

* Papperger said that France was considering drastic cuts to

the project's budget, adding talks included the idea to reduce

spending to "less than half" of previous plans.

* So far, the shareholding companies have received just €25

million ($29 million) since the project's inception, Papperger

added.

* Berlin and Paris agreed in 2017 to work on the

Franco-German Main Ground Combat System (MGCS) tank to succeed

the German Leopard 2 and the French Leclerc, but the project has

been hit with delays.

* Papperger's comments come days after Germany and France

scrapped the FCAS joint fighter project while KNDS's governance

structure has also created tensions between the two countries,

sources have said. ($1 = 0.8645 euros)

(Reporting by Christoph Steitz; Editing by Emelia

Sithole-Matarise)