* Deal now unlikely until late 2012/early 2013 - sources

* Regulators at different stages of investigation - sources

* Bank had hoped for settlement in early Q4 - sources

By Matt Scuffham and Steve Slater

LONDON, Oct 5 (Reuters) - Royal Bank of Scotland faces a delay in reaching a settlement over its role in the Libor interest rate rigging scandal because of difficulties agreeing a deal wi t h all the regulators involved, finance industry sources said.

The British bank is eager to draw a line under the affair and refocus attention on its recovery. The bank was partly nationalised during the financial crisis in a 45 billion pound rescue by the UK government.

Barclays was fined $450 million by U.S. and UK regulators in June for manipulating Libor - the London Interbank Offered Rate - and is the only bank to have settled.

More than a dozen banks are now under investigation by regulators for suspected rigging of interbank rates used to price trillions of dollars worth of financial products, including home loans and credit cards.

RBS was initially expected to settle with regulators early in the fourth quarter, but this is more likely to be at the end of 2012 or early next year because authorities around the world are working to competing agendas and at different speeds.

Reuters reported in August that U.S. and British authorities were at odds over how and when to interview key witnesses. The Financial Services Authority wanted to speak to traders ahead of a timetable set by the U.S. Justice Department.

RBS might have to settle individually with regulators instead of doing a collective deal because they are working to different time frames, several finance industry sources said.

"RBS would love to get it all over and done with. They would much rather have one fine paid up front than fines paid over several quarters because the drip feed is what investors don't like," said one source close to the bank.

Britain is keen to protect the value of its 82 percent RBS stake, with taxpayers currently sitting on a paper loss of 22 billion pounds.

RBS declined to comment on the timing or structure of any resolution.

The Financial Services Authority (FSA) declined to comment. Its chairman, Adair Turner, said in July that he expected to fine another bank for Libor rigging this year.


RBS said in August it had dismissed staff in relation to the Libor scandal following an internal investigation. It said it was co-operating with governments and regulators in the United States, Britain and Japan and with competition authorities in Europe, the United States and Canada.

Court documents filed in Singapore showed a former RBS trader discussed Libor fixing with traders from other banks and described the process as a cartel.

A person familiar with the matter said on Friday RBS had suspended a trader earlier this year for attempting to manipulate a reference lending rate in Singapore.

RBS appeared to be preparing the ground for a settlement in August when Hester said the bank would "stand up and take any punishment" arising from the affair.

Some analysts believe the bank could face a tougher punishment than Barclays which received a 30 percent "discount" on the fines for co-operating with authorities.

Barclays' executives said in July that fines handed out to other banks would "put in perspective its own punishment."

Reuters reported in July that RBS and Switzerland's UBS were two of the banks that had played a central role in the manipulation of the rates.

The fallout from Barclays' fine led to the departure of Chief Executive Bob Diamond.

The regulatory mood has since become more aggressive.

U.S. authorities, for example, have attacked practices at UK banks Barclays, HSBC and Standard Chartered over the summer. A fine by New York's banking regulator on Standard Chartered for lax anti-money laundering controls on transactions with Iran hig h lighted competition between U.S. regulators.

Also on HuffPost:

Loading Slideshow...
  • Barclays Begins Manipulating Libor Rate

    Barclays allegedly began manipulating the Libor rate in 2005 and allegedly stopped manipulating Libor in 2009, <a href="http://www.businessweek.com/news/2012-07-11/barclays-u-dot-s-dot-say-libor-probe-doesn-t-affect-2010-case" target="_hplink">according to <em>Businessweek</em>.</a> But other reports indicate that <a href="http://www.huffingtonpost.com/2012/07/09/libor-scandal-manipulation-spanned-decades_n_1658696.html" target="_hplink">Libor fixing may have spanned decades.</a>

  • Barclays Employee Admits Libor Is Being Rigged

    A Barclays employee told an analyst from the New York Fed's Markets Group that Barclays was indeed using false information to set the interest rate on April 11, 2008, according to <a href="http://www.huffingtonpost.com/2012/07/13/geithner-libor_n_1671211.html" target="_hplink">recently released Federal Reserve documents</a>. "We know that we're not posting, um, an honest LIBOR," the Barclays employee told the New York Fed's Fabiola Ravazzolo, according to a <a href="http://www.newyorkfed.org/newsevents/news/markets/2012/libor/April_11_2008_transcript.pdf" target="_hplink">transcript of the phone conversation.</a>

  • Geithner Privately Expresses Concern Over Libor's Integrity

    In June 2008, then-president of the New York Federal Reserve Timothy Geithner sent a memo to British banking authorities expressing concern over the "integrity and transparency" of the key interest rate. Geithner did not inform British regulators that a Barclays employee admitted that Libor was being rigged, <a href="http://in.reuters.com/article/2012/07/25/geithner-libor-idINL4E8IP17720120725" target="_hplink">according to Reuters.</a>

  • Banks Ripped Off The Government During Bailout

    During the 2008 Financial Crisis, the U.S. government lent money to cash strapped banks and AIG using Libor to determine interest, <a href="http://www.huffingtonpost.com/mark-gongloff/timothy-geithner-libor_b_1701904.html" target="_hplink">Treasury Secretary Tim Geithner told Congress on July 25, 2012.</a> The artificially low rate saved the banks and AIG billions, while costing tax payers the same amount.

  • Peter Mandelson: Barclays CEO The "Unacceptable Face Of Banking"

    In April 2010, then-UK Business Secretary Peter Mandelson told the<em>Times of London</em> that then-CEO of Barclays, Robert Diamond, was "the unacceptable face of banking" after the bank announced that its CEO would receive a bonus of 63 million pounds, <a href="http://news.sky.com/story/771318/mandelson-attacks-bank-boss-for-63m-salary" target="_hplink">Sky News reports.</a> Mandelson also told <em>the Times</em> that banking bosses were expected to act with "a bit more modesty, a bit more humility" than Diamond's behavior.

  • Barclays Fined $450 Million

    On June 27, Barclays disclosed to its shareholders that it would be fined $450 million by U.S. and U.K. regulators for conspiring to manipulate the Libor rate between 2005 and 2009, <a href="http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9374118/Barclays-libor-fixing-scandal-timeline.html" target="_hplink"><em>The Telegraph</em> reports</a>.

  • Barclays Chairman Resigns

    On July 2, <a href="http://group.barclays.com/news/news-article/1329925915887/navigation-1330349038798" target="_hplink">Barclays announced</a> that it's Chairman, Marcus Agius, would be resigning in the wake of the Libor rigging scandal. In the official resignation letter, Mr. Agius stated that the Libor rigging constituted "unacceptable standards of behaviour within the bank." He went on to say: <blockquote>As Chairman, I am the ultimate guardian of the bank's reputation. Accordingly, the buck stops with me and I must acknowledge responsibility by standing aside."</blockquote>

  • Robert Diamond Resigns As Barclays CEO

    On July 3, Robert Diamond resigned as Barclays CEO, <a href="http://www.washingtonpost.com/business/barclays-boss-diamond-quits-with-immediate-effect-latest-scalp-of-price-fixing-scandal/2012/07/03/gJQAFeDxJW_story.html" target="_hplink"><em>The Washington Post</em> reports.</a>

  • Marcus Agius Re-Appointed As Barclays Chairman

    On July 3, <a href="http://www.newsroom.barclays.com/Press-releases/Board-changes-907.aspx" target="_hplink">Barclays announced</a> that Marcus Agius would be reappointed as the bank's full-time Chairman following the resignation of Robert Diamond.

  • Did The Bank of England Encourage Barclays?

    On July 3, Barclays released phone records between CEO Robert Diamond and the Deputy Governor of the Bank of England, Paul Tucker, that indicate that the BoE executive encouraged Barclays to manipulate the Libor rate, <a href="http://online.wsj.com/article/SB10001424052702304141204577506602345146644.html" target="_hplink"><em>The Wall Street Journal </em>reported.</a>

  • Diamond Goes Before Parliament

    On July 4, Bob Diamond told a U.K. parliamentary panel that he believes other major banks were involved in Libor rigging, <a href="http://online.wsj.com/article/SB10001424052702304141204577506602345146644.html" target="_hplink"><em>The Wall Street Journal</em> reports.</a> He also stated that fear of being nationalized during the 2008 Financial Crisis contributed to its actions.

  • Bob Diamond Loses His $31 Million Bonus

    Barclays CEO Bob Diamond agreed to forgo an extra $31 million bonus, the bank announced on July 10, according to the <a href="http://online.wsj.com/article/SB10001424052702303343404577518263465180508.html" target="_hplink">reports <em> Wall Street Journal</em>.</a> Diamond will still net his salary and pension for a year, which is worth about 2 million pounds.

  • At Least 16 Banks Under Investigation

    At least 16 banks were reportedly under investigation for Libor rigging as of July 11, <a href="http://www.huffingtonpost.com/2012/07/11/libor-rate-scandal_n_1664737.html#slide=1212066" target="_hplink">according to Reuters.</a> In an internal bank memo circulated on July 13, Barclays executive committee told employees that, "As other banks settle with authorities, and their details become public, and various governments' inquiries shed more light, our situation will eventually be put in perspective," <a href="http://business.time.com/2012/07/16/libor-rigging-what-the-regulators-saw-but-didnt-shut-down/" target="_hplink"><em>TIME Magazine</em> reports.</a>

  • EU Weighs Criminalizing Rate Rigging

    On July 25, <a href="http://www.huffingtonpost.com/2012/07/25/eu-criminalizing-rate-rigging_n_1701248.html?utm_hp_ref=business" target="_hplink">the European Union proposed making the rigging of international interest rates a criminal offense.</a>