Key points of second UK bank rescue plan

LONDON, Jan 19 (Reuters) - Britain's Treasury will release details of the country's second bank rescue plan in four months before markets open at 0800 GMT on Monday.

Below are key features of the plan, as told to Reuters by sources close to the discussions between the government and bankers over the weekend.

* Banks would have to identify their riskiest assets which they could then insure with the government for a fee. They would still be liable for initial losses but could at least put in a ceiling, hence boosting confidence.

* Build on the recommendations of a government-sponsored report that called for guarantees of the mortgage-backed securities market, perhaps to include other asset-backed products.

* An extension of the window for the Credit Guarantee Scheme to December from April. Under this, the state guarantees debt issued by banks that were recapitalised by the government last year.

* A successor for the Bank of England's Special Liquidity Scheme, which expires this month and allows financial institutions to swap their hard-to-trade assets for more liquid ones.

* The government would also no longer run down the loan book of Northern Rock, the bank it nationalised last year.

* The government will also swap up to 5 billion pounds ($7.46 billion) of preference shares in Royal Bank of Scotland for ordinary shares, aiming to remove pressure on the bank to pay 12 percent annual interest. That could see Britain increase its stake in the lender to near 70 percent from 58 percent.

For a story on the bank measures, click on ((Reporting by Sumeet Desai; editing by Kim Coghill; Reuters messaging: sumeet.desai.reuters.com@reuters.net; +4420 7542 7708)) ($1=.6704 Pound)