The Government is forcing the Royal Bank of Scotland to meet the costs of US fines for Libor rigging from staff bonuses and pay.
RBS, which is 83 per cent owned by the Government, has been fined £87.5m by the FSA, £207m by the US Commodities and Futures Trading Commission and £95m by the US Department of Justice, bringing its total payable to £390m.
Under new rules the FSA fine money will go straight to the Treasury, after the regulator has taken enforcement costs.
Speaking to the House of Commons today in a statement on the RBS fine, Treasury financial secretary Greg Clark said the scandal is “extremely serious” and “motivated by greed”.
He said: “While it is right that RBS faces the full force of regulatory action in light of its conduct, the Government believes it would clearly be wrong for the taxpayer to foot the bill.
“In the case of US fines, I am insistent the taxpayer should not foot the bill. These fines must be met in full by past, present and future reductions of bonuses and pay of RBS.”
Democratic Unionist MP Sammy Wilson asked for assurances RBS will not recoup the lost bonus money by passing on customer charges in later years.
Clark said it is “absolutely essential” banks are “transparent” over where the money comes from.
Parliamentary Commission on Banking Standards member and Labour MP Andy Love hit out at the FSA for not being tough enough over the RBS fine.
He said: “The American regulators have imposed fines that are three times higher than the FSA and gives the appearance to be much more robust on their investigation of Libor and other issues.”
Clark also revealed the RBS fine money would be donated to armed forces charities as it did with £35m last year from a Barclays’ Libor rigging fine. He pledged to outline the specific details at a later date but promised it would be used as a “force for good”.
Clark also revealed former RBS’s head of its investment arm John Hourican, who quit the bank today over the scandal, gave up £5m in bonuses as a result.