Royal Bank of Scotland warned that there will be more penalties to come as it pledged that its bankers will meet most of the cost of the £390m in fines it has agreed to pay as a result of its traders' attempts to fix Libor interest rates.
The bank warned that regulators in Japan and Switzerland are set to impose big fines after a ring of 21 staff was found to have been involved in attempts to fix yen and Swiss franc Libor interest rates. The bank, 81 per cent owned by the taxpayer, also faces a penalty for failings relating to money laundering.
Watchdogs found RBS traders were still engaged in misconduct as recently as November 2010, two years after the £45bn state bailout and when they knew an investigation was under way. The manipulation started in 2006.
And as has become standard practice, a series of embarrassing emails was published with one trader graphically referring to himself as being "like a whores [sic] drawers" after asking a colleague to lower a Libor submission.
At least 219 of these requests for inappropriate submissions were documented along with an unquantifiable number of oral requests. RBS traders were also found to have made corrupt payments to outside brokers.
The bank said just over £300m would be stripped from its bonus pool to pay for the United States portion of the fine, which was a shade lower than had been feared, and promised money would be "clawed back" from those responsible. The £87.5m penalty from the UK Financial Services Authority will eventually be returned to the taxpayer.
Sir Philip Hampton, the chairman, also said it was investigating clawing back money from former directors of the bank.
But the chief executive, Stephen Hester, pledged that branch staff, including tellers whose pay packages aren't much above minimum wage, shouldn't be affected by the bonus cull, although their bonus pools will be hit by the mis-selling of payment protection insurance.
Other banks are expected to be affected over the next year or so, with some 20 under investigation. Barclays was fined £290m for Libor fixing last summer and the Swiss bank UBS £940m in December. RBS was found to have "abetted" UBS traders.
Of the 21 staff found to be involved at RBS, 14 are no longer with the bank, while seven have either been disciplined or are being disciplined.
Sir Philip said some of the worst offenders had suffered something close to summary dismissal. Another manager found not to be among them was also fired, he said. Those involved in the disciplinary action ranged from top managers to a young graduate who received a written warning for inappropriate emails, usually the last step taken before someone is fired.
Addressing the issue of accountability, Mr Hester said: "All of us at the top, myself, board and other members of the management team are responsible for what goes on on our watch." He said that while there was "no trail beyond 21, even if not you are accountable".
However, Mr Hester said he would not resign and remained determined to stay at the bank to "clean up the mess".
"I'm clear that I was brought in to clean up a huge mess. I believe RBS has made incredible progress and the good bits outweigh the things we have not done. My job is to pull off this recovery," he said.
As expected, the investment banking chief John Hourican paid with his job for the scandal, despite there being no finding that he had any knowledge.
Sir Philip said the affair had been "particularly hard on John" but said the "captain on deck" had to pay a penalty.
Watchdogs on both sides of the Atlantic condemned the activity.
The US Commodity Futures Trading Commission said: "RBS did not institute any meaningful controls, procedures or policies concerning Libor submissions until on or about June 2011. During this time, RBS was experiencing significant growth on its yen and Swiss franc trading desks, generating revenues for RBS that were multiplying over the years."
Tracey McDermott, director of enforcement and financial crime at the FSA, said: "The failures at RBS were all the more serious because of the attempts not only to influence the submissions of RBS but also of other panel banks and the use of interdealer brokers to do this. The size and scale of our continuing investigations remains significant."
However, some in the City were disturbed at what they saw as the persecution of British banks. Cantor Index's David Buik said: "US and German banks have yet to be exposed, which is slightly dispiriting to say the least. To single out UK banks in such an obvious manner does not appear to be fair."
Deutsche bank suspends five in euribor inquiry
Five traders have been suspended at Deutsche Bank following an internal investigation into Europe Interbank Offered Rate (Euribor) manipulation.
The suspensions are understood to have been made in the bank's Frankfurt offices on Tuesday. The traders are believed to have counted Euribor submissions among their responsibilities.
Deutsche Bank declined to name the traders but said that no current or former board members were implicated.
A bank spokesman referred to a statement in January when it commented about progress on its internal inquiry. The investigation is being led by Deutsche Bank's legal department.
"Upon discovering that certain employees acted inappropriately, we have suspended or dismissed employees, clawed back unvested compensation, and will continue to do so as we complete our investigation," Deutsche said at the time.