The Royal Bank of Scotland will pay $615m in fines to US and UK authorities, in addition to pleading guilty to wire fraud in Japan, in a bid to settle allegations that it manipulated global benchmark interest rates.
The bank, of which the British government owns 80 percent, will cut into its staff bonuses to pay the fines, the second-largest so far in an international investigation that has already implicated Switzerland's UBS and Britain's Barclays.
"The RBS board acknowledges that there were serious shortcomings in our systems and controls and also in the integrity of a small group of our employees," Philip Hampton, RBS chairman, said on Wednesday.
"This is a sad day for RBS, but also an important one in continuing to put right the mistakes of the past."
Twenty-one traders at RBS offices in London, Singapore and Tokyo manipulated the London interbank offered rate (LIBOR), which is used to price trillions of dollars worth of loans, from at least 2006 until 2010.
The rigging continued even after traders learned that LIBOR submissions were being probed.
About 87.5m pounds ($137.1m) will be paid to Britain's Financial Services Authority, $150m to the US justice department and $325m to the US Commodity Futures Trading Commission.
The bank has also entered into a deferred prosecution agreement with the US justice department in relation to one count of wire fraud relating to Swiss franc LIBOR and one count for an antitrust violation relating to yen LIBOR.
RBS Securities Japan Limited has also agreed to enter a plea of guilty to one count of wire fraud relating to Yen Libor, the British bank said in a statement.
Like UBS, RBS did not have to admit criminal liability in the US, meaning it can retain its banking licence there and avoid a heavily discounted sale of its US-based Citizens Bank.
The bank said John Hourican, head of RBS's investment bank, had agreed to leave following the misconduct of staff in that business. Hourican had no involvement in or knowledge of the misconduct, RBS said.
UBS agreed in December to pay fines of $1.5bn to regulators in the US, Britain and Switzerland over LIBOR rigging. Its unit in Japan, where much of the wrongdoing occurred, pleaded guilty to criminal fraud.
US prosecutors also filed criminal conspiracy charges against two former UBS traders allegedly at the heart of the scheme.
Barclays was able to get a non-prosecution agreement and paid $453m in penalties. Barclays' three most senior executives, including then chief executive Bob Diamond, were also forced to leave the bank in the wake of the scandal.