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