Royal Bank of Scotland plans bonus cut to help cover Libor rigging fines

Royal Bank of Scotland, Britain's biggest publicly owned lender, may reduce the bonus pool at its investment bank by more than a third as it prepares to pay fines to US and British regulators for Libor manipulation, a person with knowledge of the plan said.

RBS was poised to set aside about £250 million (HK$3.05 billion) for bonuses at the division, compared with £390 million for 2011, said the person, who asked not to be identified because a final decision is yet to be taken.

The bank planned to recoup between £100 million and £150 million from the bonus pool to offset the £500 million it expected to pay in fines to regulators as soon as next week to settle allegations of rate-rigging, two people with knowledge of the matter said earlier this month.

The reported the reduction yesterday.

The fine would be the second-largest levied by regulators in their investigation into allegations traders at the world's biggest lenders manipulated submissions used to set the London interbank offered rate.

UBS, Switzerland's biggest lender, was fined US$1.5 billion last month for rate-rigging, exceeding the £290 million Barclays paid in June.