The part-nationalised Lloyds Banking Group and Royal Bank of Scotland are expected to report combined losses of at least £4 billion for last year.
Significant losses will revive fears that taxpayers will have to wait several years to recoup the £66 billion given to banks by the Government at the height of the economic crisis.
RBS is expected to report losses of up to £2 billion and Lloyds could report a £3.5 billion loss after compensation from mis-selling payment protection insurance is deducted, The Sunday Times newspaper said.
Lloyds, 41% owned by the taxpayer, received £20 billion from the Government, and 83% state-owned RBS received £45 billion.
While there has been some recovery in the share price in the last couple of months, both banks are close to 50% lower than they were a year ago, amounting to a paper loss of more than £30 billion for the Government.
Poor results will also fuel the debate about bankers' pay, which has been raging in recent weeks.
RBS is at the centre of the row which ultimately led to chief executive Stephen Hester waiving his £963,000 all-shares bonus, although he will still reportedly receive shares worth about £660,000 as part of the £2 million bonus he was handed for his 2010 performance.
Lloyds has managed to avoid the bonus row so far. Boss Antonio Horta-Osorio waived his annual payout due to a leave of absence.
RBS has moved to strip down its investment arm Global Banking and Markets which employs 18,900 people worldwide. The restructuring will lead to around 3,500 job losses on top of the 2,000 announced by the bank last summer.
Lloyds, which announced 15,000 job cuts last summer, is close to selling off 632 branches - a move enforced by the EU as a condition of taking the state bailout - with the Co-operative Bank as a preferred bidder.
