02/02/2013 07:45 GMT | Updated 02/02/2013 08:47 GMT

Libor Fines Must Be Paid By Banks, Not The Taxpayer, George Osborne Tells Banks

George Osborne has insisted that any US fines meted out to the Royal Bank of Scotland (RBS) over the Libor scandal must be paid from the pocket of the bankers, not the taxpayer.

It is expected that the bank will be fined a much larger amount than Barclays were last year, when they were forced to cough up £300million pounds for their role in the rate-fixing scandal, which cost the jobs of senior staff including Bob Diamond and Marcus Agius.

Sky News estimates the fine could reach £500million, with RBS looking into clawing back almost half of that amount through bonuses already paid to senior executives in the bank's investment wing.

Sky News also reports that the bank's remuneration committee plan a 'flat tax' on bonus pay packets to cover the fine.


RBS' fine is set to be revealed in the US

As RBS is still majority-owned by the Government after its near collapse at the height of the recession, Osborne has firmly stated that the taxpayer should not in any way fund the fine.

According to the BBC, senior Treasury sources have said that the Chancellor "had made it clear that the financial penalty imposed by American regulators must be covered by deductions from the bonuses of bankers at RBS".

Osborne's plan would see current and future bonuses revoked for staff at RBS in order to pay back any fine levied.

As well as Barclays' £300million fine, multinational bank UBS was fined a gargantuan £940million for its part in fixing the Libor.