Bank rescue plan to include recapitalisation

LONDON (Reuters) - The government's plan to rescue its ailing banking sector will include "an element of recapitalisation," a government source said on Tuesday, but he said precise details were still being worked out.

The plan is due to be unveiled by Chancellor Alistair Darling before markets open on Wednesday, following talks among Darling, Prime Minister Gordon Brown, the governor of the Bank of England and the head of the Financial Services Authority.

"There will be an element of recapitalisation for the banks," the source said. But he cast doubt on the possibility of major banks being offered a stand-by facility that would effectively ensure that they do not run out of cash.

"A lot of the speculation that's out there at the moment is wide of the mark," he said.

(Reporting by Sumeet Desai; Editing by Jodie Ginsberg)