Taxpayer-backed Royal Bank of Scotland (RBS) sacked four of its traders at the end of last year over their alleged role in the Libor-fixing scandal, sources said today.
The revelation comes after the bank confirmed it is being investigated for manipulating the rates at which banks lend to each other.
Two of the traders were removed from their posts in October and a third the following month.
RBS has not commented on the sackings.
The RBS revelation comes amid speculation over the scale of the rate-rigging probe in the UK and internationally in the wake of the Barclays settlement last Wednesday.
Barclays boss Bob Diamond is preparing to face a panel of MPs over the controversy this Wednesday.
He has so far resisted pressure to resign, but is expected to be grilled on what actions the bank is taking against staff involved.
Calls are mounting for criminal proceedings to be taken against anyone found to have manipulated the Libor interbank lending rate.
Ministers have also announced an independent review into the inter-bank lending rate after the rigging scandal, but a wider inquiry into the banking industry has been urged by Labour leader Ed Miliband.
The Government said the independent review will consider the future operation of the so-called Libor rate and the possibility of introducing criminal sanctions for its manipulation.
Treasury sources said its review, to be headed by an as-yet-undisclosed independent figure, would ensure a speedy response to the issue, resulting in amendments to the Financial Services Bill this summer.
Ministers are considering setting up a separate review into the professional standards of bankers.
But Mr Miliband insisted the public would not accept anything less than a full-scale independent inquiry into the culture and practices of banking.
Barclays was fined £290 million by UK and US regulators for manipulating the rate at which banks lend to each other in the first of two scandals to rock the City this week.
On Friday, the FSA revealed separately that Barclays, HSBC, Royal Bank of Scotland and Lloyds Banking Group had agreed to pay compensation to customers who were mis-sold interest-rate hedging products.
Some 28,000 of the products have been sold since 2001 and may have been offered as protection - or to act as a hedge - against a rise in interest rates without the customer fully grasping the downside risks.
Serious Fraud Office investigators are in talks with the regulator over the scandal.
Business Secretary Vince Cable has said shareholders in British banks should “get a stronger grip” on the boards and executives responsible for “systemic abuse”.
He said that nobody at Barclays was prepared to take responsibility for the rate-rigging scandal that has engulfed the company in recent days and that shareholders ought to take action.
Writing in an article for The Observer, Mr Cable said: “Regulators are a backstop: they don't own banks.
“The governance at the top of our leading banks has been shown to be lamentably weak. No-one at the top of Barclays will take responsibility for systemic abuse.”
He added: “Shareholders, the owners, have a major responsibility here. I am bringing in legislation to strengthen their control over pay and bonuses, through binding votes, but shareholders have to get a stronger grip on weak boards and out-of-control executives.”
Prime Minister David Cameron said the Government would ensure “the criminal law can go wherever it needs to”.
Asked about calls for a wide-ranging inquiry, he said: “Let's take our time, think this through carefully... That's what I'm determined to do, and that's what we will do.”
But Mr Miliband said the Prime Minister was “out of touch” and warned that voters would not accept “the establishment closing ranks”.
He called for an inquiry along the lines of Lord Justice Leveson's into media ethics and practices.
“I have news for David Cameron - the people of this country want a moment of reckoning for our banks,” he told a Fabian Society conference in London.
“The British people will not tolerate the establishment closing ranks saying 'we don't need an inquiry'.
“They want a light shone into every dark corner of our banking system. They want bankers held to account. They want the system rebuilt.
“Nothing less than a full public inquiry can do that. Sticking-plaster solutions will not heal this wound.”
Today's Observer newspaper said that in a 28-page statement of facts relating to the case, the US Department of Justice discloses how a network of traders working on both sides of the Atlantic conspired to influence the interbank lending rate.
The document reportedly states that the collusion between traders across a range of banks, including Barclays, took place from at least August 2005 through to at least May 2008.
It says those interbank communications included ones in which certain Barclays swaps traders communicated with former Barclays swaps traders who had left Barclays and joined other financial institutions.