* Chat rooms with workers at other banks prohibited
* Social chat rooms banned and must be closed immediately
Dec 19 (Reuters) - Royal Bank of Scotland's markets division has banned the use of multi-dealer online chat rooms, the bank said, joining rival banks that have taken similar action in response to regulatory scrutiny.
Chat rooms have been a focus for regulators investigating manipulation of the Libor and Euribor benchmark interest rates and possible rigging in the $5.3 trillion-a-day foreign exchange market.
Confirming a Bloomberg report, RBS said it had told front office staff in its markets division that all permanent chat rooms with workers at other banks, bank entities or competitors had been prohibited, as well as those with clients, brokers and securities firms, unless certain criteria were met.
RBS has also told staff that all social chat rooms are prohibited and must be closed immediately. It said the primary purpose of chats should be business related and adhere to the group's competition law guidance.
Sources told Reuters this week that JPMorgan Chase, the biggest U.S. bank by assets, was planning to ban the use of multi-dealer online chat rooms and the use of such rooms among staff for social purposes.
Deutsche Bank had prohibited its foreign exchange and fixed income staff from using online chat rooms, and UBS banned the use of multi-bank and social chat rooms at its investment banking division. Citigroup and Barclays had also clamped down, according to people familiar with the matter.
Traders at banks and financial institutions often communicate with each other online via third-party services including Bloomberg LP and Thomson Reuters.