* RBS, Lloyds face "significant legacy losses" -UKFI
* UKFI report says no fixed timetable for disposal of shares
* Sees a number of deals over sustained period
(Adds report)
By Myles Neligan and Douwe Miedema
LONDON, July 13 (Reuters) - Britain needs patience in selling stakes in two of its biggest banks, the body managing the holdings said, refusing to give much detail of an exit that could cost taxpayers billions of pounds.
The two banks -- Royal Bank of Scotland and Lloyds Banking Group -- face "significant legacy losses" and would have to cope with the impact of the recession, UK Financial Investments said in its first annual report.
"UKFI does not set any fixed timetable for disposing of the shares, but says it expects to undertake a number of capital markets transactions over a sustained period," the group said in an accompanying press release on Monday.
UKFI -- which employs just 11 people at present and is run from a small set of offices in the Treasury -- was aiming to keep out of the headlines with the report, two sources familiar with the report had told Reuters earlier.
The body holds a 70-percent stake in RBS and 43.3 percent of Lloyds and is run by John Kingman, a former Treasury official who now works with former investment bankers, and has stressed the body's independence from the government.
Shares in RBS were 0.15 percent higher at 35.715 pence, roughly in line with the market. Lloyds was 1.66 percent lower at 62.08 pence, with traders quoting a Sunday Times report that Lloyds was poised for further writedowns.
Kingman, who was also a journalist, got off to a rocky start with politicians when a hearing in March said it was "scandalous" that he failed to provide details of executive pay at the banks the UKFI holds stakes in.
UKFI -- a company described by its chairman Glen Moreno as a "Fidelity with nuclear weapons" in a reference to the large U.S. fund manager -- was set up in December to manage the stakes after the UK's 37 billion pounds ($60 billion) bail-out.
"The amounts involved are very large, and a successful disposal of our holdings will require professionalism and patience," the group also said.
Kingman has tried to distance the group from politicians, saying it will operate like any other engaged shareholder to maximise the value of its holding, and that it plans to sell down its holdings over time in an orderly way.
According to Reuters calculations the average purchase price for RBS shares was about 51 pence, compared with the bank's current market price of about 36.3 pence.
For Lloyds, the purchase price was about 120 pence, including "B" shares, against a current price of 64 pence.
That means British taxpayers may be facing a loss of well over 10 billion pounds on the government's holdings if they were sold at the current market rates.
At the Treasury, Kingman had been in control of 600 billion pounds of public spending annually and led talks with RBS, Lloyds TSB and HBOS on their recapitalisation, and on the nationalisation of Northern Rock.
($1=.6172 pounds)
(Additional reporting by Steve Slater; editing by Simon Jessop)