LONDON: Britain's government will pour up to another 40 billion pounds into bailed out lenders Royal Bank of Scotland, Lloyds Banking Group and Northern Rock ahead of a planned selloff, newspapers said Monday.

The extra money will shore up the troubled banks as part of government plans to be announced this week to break up and sell off parts of the three lenders, the Daily Telegraph said.

The huge shake-up comes as the government seeks to recoup taxpayers' cash used to prop up the banks during the world financial crisis and increase competition in the sector.

Lloyds Banking Group (LBG) is 43 percent owned by the state and Royal Bank of Scotland (RBS) 70 percent, while Northern Rock was nationalised outright.

Finance minister Alistair Darling has agreed to spend up to 26 billion pounds (28.9 billion euros, 42.7 billion dollars) in extra shares to support RBS as it seeks to join the government's insurance scheme for toxic assets.

The issue of the shares will mean the government's stake in RBS will rise from 70 percent to 84 percent, according to the Guardian newspaper.

Darling has agreed to spend 5.5 billion pounds in shares for LBG, which is planning to raise billions of dollars in a share issue to avoid entering the government asset protection scheme.

Northern Rock is to be loaned another eight billion pounds so that it can be split into two and sold off, a move approved by EU competition regulators last week, the reports said.

Darling confirmed reports Sunday that the three existing lenders would be broken up and parts sold over the next few years to new entrants to the sector, who would concentrate on deposits and mortgages.

"What you really want to do is have quite a substantial divestment -- perhaps branches or perhaps particular institutions that they own -- made available to other people," Darling told the BBC.

"Because unless we get competition we are going to end up with half a dozen big providers which would be a big reduction in choice and that would not be acceptable."

Darling, the Chancellor of the Exchequer, did not reveal Sunday details of the new banks to emerge from the breakup plans.

All three banks received huge government bailouts at the height of the global economic storm but regulatory authorities are concerned about such state-backed banks having an unfair advantage over those that were not helped.