London- The governor of the Bank of England indicated Tuesday that further nationalizations in the British banking sector could not be ruled out if banks continued their lending freeze.

Mervyn King told a parliamentary committee that the resumption of lending by banks was now the most pressing challenge in the battle to revive the ailing economy.

His comments came during questioning by members of the parliamentary Treasury Select Committee about the impact of government measures, including the major bail-out package for banks agreed by the British government on October 8.

The government's recapitalization scheme, worth 37-billion pounds (55 billion dollars) was primarily designed to boost the capital held by banks to encourage greater confidence to lend to each other.

But the government, and the Bank of England, have said there are no signs that the scheme was having the desired effect.

When asked whether there could be more nationalizations of banks in Britain, King said: "In times of financial crisis it would be a serious error to rule out measures which may prove necessary."

The October bail-out was preceded by the nationalization of stricken mortgage lender Northern Rock in February. (dpa)