RBS reviews future of executives as Libor deal nears: source

People use a Royal Bank of Scotland (RBS) cashpoint in Edinburgh, Scotland November 14, 2012.

LONDON (Reuters) - Royal Bank of Scotland (RBS.L) is considering whether two senior executives should leave as it nears a deal with regulators over its role in a global interest rate rigging scandal, a source familiar with the situation told Reuters.

John Hourican, head of RBS's investment bank and Peter Nielsen, head of markets at the part-nationalized British bank, could be asked to quit at the same time as a settlement over alleged manipulation of the London interbank offered rate (Libor) and other benchmark rates, said the source, who declined to be named.

There was no suggestion during the investigation that either of the bankers had any knowledge of wrongdoing, the source said, adding that no decision had been taken by the bank as to whether to ask them to leave.

Hourican and Nielsen were not available for comment. RBS declined comment.

RBS is expected to face fines greater than the $450 million paid by rival Barclays (BARC.L) over rigging of Libor and other benchmark interest rates used to price trillions of dollars of financial instruments.

Britain's financial regulator, the Financial Services Authority, is keen that more individuals are seen to be held accountable for RBS's role in the affair than the handful of relatively junior traders who have so far been dismissed, the source said.

Barclays' three most senior executives, including Chief Executive Bob Diamond, were forced to leave the bank following its settlement last June.

However, sources have told Reuters that RBS is confident the position of its Chief Executive Stephen Hester is not in danger.

The source said a settlement may be reached as early as the week starting January 21. The Financial Services Authority is nearly ready to make public sanctions it will take against RBS and is waiting for U.S. regulators to complete their investigations.

RBS, which is 81 percent owned by the UK taxpayer following a government bailout, is desperate to draw a line under the episode in order to focus on its long-term recovery plan.

(Reporting by Matt Scuffham; Editing by Matthew Tostevin)