THE body set up to manage the government's stake in Lloyds Banking Group and Royal Bank of Scotland said today that it was sitting on paper losses of £10.9bn.

UK Financial Investments (UKFI) - which has said every household in the country has effectively more than £3,000 invested in Lloyds and RBS shares - said it would not lay out a fixed timetable for the disposal of its stakes in the banks.

UKFI added that it was `completely focused' on the task of maximising the return for the taxpayer and returning the banks to the private sector.

The losses - which do not include B shares, involved in the taxpayer-funded asset protection scheme - are less than the £18.1bn shortfall registered in February of this year.

"Our own task of returning these investments to the private sector is challenging," UKFI said in its annual report today.

The investments were recently valued at £15.3bn for RBS and £8.3bn for Lloyds, but the taxpayer has put £20bn and £14.5bn into the two banks.