UPDATE 7-UK banks set for 40 bln stg bailout - sources

(Recasts with more source comments, BBC report)

By Ralph Gowling and Steve Slater

LONDON, Oct 12 (Reuters) - Britain could pump over 40 billion pounds ($69 billion) into major banks and take big stakes as part of a recapitalization of ailing lenders due to be unveiled early on Monday, people familiar with the matter said Sunday.

Four banks are in line to receive the billions of pounds from investors and taxpayers to boost their capital to prepare them for tough economic times ahead, according to the people familiar with the matter, who declined to be identified.

Crisis talks among the banks, government and regulators ran through Sunday and were due to continue through the night to determine how much capital each would need from the 50 billion pounds offered by Britain last week.

An announcement is expected before markets open on Monday, but details are still being fine-tuned, said the sources.

Royal Bank of Scotland Group Plc (RBS.L) could take more than 15 billion pounds, HBOS Plc HBOS.L could take in 10 billion, Barclays Plc (BARC.L) may seek over 7 billion and Lloyds TSB Group Plc (LLOY.L) about 5 billion, according to industry sources and media reports. The BBC said RBS alone is in line for 20 billion pounds and the total for all four would be 45 billion.

Banks are expected to try to sell shares to existing investors, backed by the government, which would buy the shares not taken by investors.

That could result in the government becoming the biggest shareholder -- and even a majority investor -- in RBS and HBOS.