REFILE-UPDATE 1-U.S. to soon name next banks to get capital -sou

(Refiles with no changes to text, to additional subscribers)

(Adds details on capital injection plans, byline)

By Karey Wutkowski

WASHINGTON, Oct 23 (Reuters) - The U.S. Treasury Department and banking regulators plan to announce as soon as Friday or this weekend the next round of banks receiving capital injections under a $700 billion financial services rescue package, according to a source familiar with Treasury's thinking.

The Treasury in recent days has detailed a plan to directly inject $250 billion of capital into U.S. banks in exchange for preferred shares. Nine of the largest U.S. banks were essentially arm-twisted last week into signing on for the first $125 billion in capital infusions in an attempt to remove the stigma that participating banks need the funds to survive.

Neel Kashkari, Treasury's interim manager for the rescue program, told lawmakers on Thursday that more banks are expected to receive capital infusions within a few weeks, meaning that Treasury could announce those banks in the coming days.

The source said some of those banks' infusions will be "announced shortly" and that it could come as soon as Friday.

The Treasury on Monday began taking applications from U.S. banks interested in tapping into the remaining $125 billion in a government equity infusion program.

The government also on Monday provided more details about the program, saying that once it decides to approve an application, it will announce the investment within 48 hours. Treasury will not disclose banks that withdraw or are turned down.

Treasury said there is enough capital available to provide injections to all qualifying banks and that those firms interested must apply through their primary regulatory agency by Nov. 14.

The injections are designed to encourage healthy banks to boost their lending activities, which have fallen sharply as the housing downturn and subprime mortgage debacle created a ripple effect that froze global credit markets.

"Our purpose is to increase confidence in our banks and increase the confidence of our banks, so that they will deploy, not hoard, their capital. And we expect them to do so, as increased confidence will lead to increased lending," Paulson said on Monday. (Reporting by Karey Wutkowski; Editing by Gary Hill and Bernard Orr)