The report from the new analysis revealed that the Government could yield profits of around £30 billion over the next five years from its stake in British bailed out banks.

According to the Banker magazine, the taxpayers could earn profit of £19 billion on its investment if equity share prices will remain on track with economic growth forecast for next five years.

The profits also include £2 billion in fees for guaranteeing bank bonds, £5 billion from fees for the Asset Protection Scheme (APS) and £1 billion in loan fees.

The profits will help the government to cut down its debt from present level of 60 percent to 1.1 percent of GDP by 2015-16.

Taking into account the dividend and other earnings, UK taxpayers are breaking even on their 83 percent shareholding in Royal Bank of Scotland and 41percent in Lloyds TSB.

The reduced banking regulation and the decreasing cost of funding are expected to boost the profits in coming years.

Leading strategist at Credit Suisse, Andrew Garthwaite said, "We believe risks are receding, opportunities arise. We view the current market uncertainties as an opportunity to reinforce holdings in the banks."