* UK Finance Ministry wants bonuses cut to pay fines-source
* RBS braced for fines next week - sources
By Matt Scuffham
LONDON, Feb 2 Royal Bank of Scotland
faces the prospect of scrapping all bonuses for its investment
bankers this year to free up cash to pay fines for its
involvement in a global interest rate rigging scandal.
The part-nationalised bank, which is expected to face fines
of between 400 million and 500 million pounds ($787 million), is
under pressure from Britain's Finance Minister George Osborne to
ensure that taxpayers do not suffer as a result.
RBS is expected to be fined up to 100 million pounds by
Britain's financial regulator with the rest being paid to U.S.
authorities, sources have said. Britain's finance ministry wants
the U.S. fines to be paid out of money that would otherwise have
gone on bonuses.
"Any UK fine will already go to the public, and the
Chancellor has made it clear that on this occasion the bill for
any U.S. fine should be paid for by the bankers, and not the
taxpayer," a Treasury source said on Saturday.
The directive will not be welcomed by the bank, which has
previously complained about government interference.
Last year, RBS paid out 390 million pounds to its investment
bankers. It had proposed reducing the amount paid by between 100
million and 150 million pounds this year to help pay the fines,
sources had previously told Reuters.
RBS was rescued at the height of the financial crisis,
leaving taxpayers with an 81 percent stake after Britain pumped
in 45.5 billion pounds to keep the bank afloat.
Osborne is taking a tough stance amid public
disenfranchisement with the nation's banks, who many still blame
for causing the financial crisis and the country's subsequent
"Fixing the Libor market is a symbol of all that went wrong
with the banking system over the past ten years. We are now
putting those things right," the Treasury source said.
Reuters reported on Friday that the part-nationalised
British bank was set to be punished for the attempted
manipulation of the London interbank offered rate (Libor and
other key benchmark rates next week.
RBS could not be reached for comment.