New bailout not on Brown's agenda

By Adrian Croft

LONDON (Reuters) - The government is talking to lenders about stepping up loans to credit-starved companies, but a second bailout of banks is not the preferred option, Prime Minister Gordon Brown said on Sunday.

"I don't think that's the first thing that anybody would think about at the moment," Brown said in a BBC television interview, when asked if the government planned a second recapitalisation of the banks.

In October, the government said it would pump 37 billion pounds into three major banks -- Royal Bank of Scotland, and HBOS and Lloyds TSB, which are merging.

The banks have been hit by the credit crunch, which is now sending the economy spinning into recession.

The BBC and The Times newspaper both reported on Saturday that the government was considering a second bailout because measures taken so far had failed to get banks lending again.

But Brown said: "We've got other means by which we will try to get liquidity and cash into the system."

Brown said the government was urgently talking to the banks about solving problems that companies faced in obtaining funding and wanted a solution over the next few weeks.

Chancellor Alistair Darling told the BBC that banks were not lending as much as he would like them to do but said recapitalisation was "not your first port of call."