EU watchdogs line up hefty fines for RBS over Euribor rate rigging

EU watchdogs are preparing to impose multi-million euro fines on six banks, including Royal Bank of Scotland and HSBC, where traders are suspected of having tried to manipulate Euribor interest rates.

The news comes two years after the European Commission, which serves as Europe's competition and antitrust authority, raided a number of banks suspected of involvement in the fixing of the benchmark rate.

Euribor is similar to Libor, except it is calculated from what banks expect to pay to borrow in the euro money markets. It is used to price some €250trn (£210trn) worth of financial contracts ranging from home loans to complex derivatives.

The expected fine against RBS was included in hundreds of millions of provisions against various legal issues by RBS in its half-year results. It is thought the bank has been expecting the hammer to drop for some time.

It has previously confirmed involvement in the inquiry, saying it was co-operating with investigations "by competition authorities in a number of jurisdictions, including the European Commission and the Canadian Competition Bureau, stemming from the actions of certain individuals in the setting of Libor and other trading rates, as well as interest rate-related trading".

RBS refused to comment yesterday. Barclays is understood to have alerted the authorities over the potential manipulation and is set to escape penalty as a result. It also declined to comment.

Some of the banks involved, which are also reported by Reuters to include Deutsche Bank, HSBC and JP Morgan, may get 10 per cent reductions for settling early.

Barclays, which has been attempting to clean up its act under a new management team and chairman Sir David Walker, was also the first bank to settle the investigation into its traders involvement in attempts to fix Libor interest rates.

It paid £290m in fines to UK and US watchdogs, but ignited a firestorm which cost the then chief executive Bob Diamond his job.