UK govt bailed out banks Lloyds and RBS may post huge losses

The combined losses at the part-nationalised Lloyds Banking Group and Royal Bank of Scotland could touch £4 billion for 2011, reviving fears of taxpayers having to wait several years to recoup the £66 billion given to banks by the government at the height of the economic crisis.

The losses at RBS may be £2 billion while Lloyds may be in the red with £3.5 billion losses following deduction of compensation from mis-selling payment protection, according to The Sunday Times newspaper.

Lloyds, owned 41 per cent by the taxpayer, received £20 billion from the government, while 83 per cent state-owned RBS received £45 billion.

Though the shares have seen some recovery in the last couple of months, both are close to 50 per cent of their year-ago values, amounting to a paper loss of more than £30 billion for the government.

Poor results would also fuel the raging debate over bankers' pay, according to analysts.

RBS is at the centre of the controversy that saw chief executive Stephen Hester forego his £963,000 all-shares bonus, although he would reportedly still receive shares worth about £660,000 as part of the £2 million bonus he received for his 2010 performance.