RBS traders ‘told bonus pool will shrink this year’

Traders at the bank’s investment arm have been told by senior staff the bonus pool will be smaller as cash is diverted to settle claims that it was involved in the Libor rigging controversy, according to The Sunday Times.

RBS is thought to be weeks away from reaching a deal with regulators in Britain, America, Japan and Singapore over claims that it was involved in manipulating the rate which governs the price of loans and transactions around the world, including household mortgages.

The Financial Services Authority (FSA) and two US regulators have already fined Barclays a combined £290m in June and the scandal also claimed Barclays chief executive Bob Diamond, who was forced to resign. This month Swiss bank UBS agreed to pay almost £1 billion to regulators. Politicians are pressing ahead with reforms which will make it a criminal offence to manipulate rates such as Libor.

Traders at RBS have also been told the bank may confiscate bonuses from previous years that are due to be paid in the new year, according to the reports. RBS declined to comment.

It comes at the end of a difficult year for 80 per cent state-owned bank RBS. An IT glitch in June that locked out many RBS, Natwest and Ulster Bank customers cost the bank £175m, and its bill for mis-sold payment protection insurance claims reached £1.7 billion last month.