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The RBS guessing games are almost over

The guessing game over the size of the RBS fine is nearly over. Photo: REUTERS/Toby Melville

If all goes according to plan, tomorrow lunchtime we will finally know the size of the fine being slapped on the bank we own.

RBS is expected to have to cough up around £400 million - possibly just under that - after a guessing game that has been going on for weeks.

Around £90 million is likely to come from fines from the UK regulator, the FSA, and the rest from the US authorities - punishment for fixing the Libor rate, the misdemeanour that saw the end of Bob Diamond's career at Barclays.

File photo of Bob Diamond. Credit: Dominic Lipinski/PA Wire
  • For those very interested, the size of the actual fine depends in part on the exchange rate between the dollar and the pound the authorities use. A favourable rate to RBS could see the fine slip just in under the £400 million total mark. I am told it is therefore likely the fine might actually start with the number 3.

Again, banks are being punished for the mistakes of the past, not just with massive fines for rigging key market interest rates, that will have to come out of the money the bank allocates to bonuses.

But again tomorrow, RBS will be hit by humiliation of internal emails that were meant to stay that way, emerging into the public eye to give red faces all round.

Remember, 'Done for you big boy'? 'Come over to mine and I'll open a bottle of Bollinger'? Those excruciating exchanges exposed just how some traders at Barclays were operating. And the report into the taxpayer backed bank will feature have its own equally mortifying messages.

RBS's also expected to announce the departure of the head of its investment bank, John Hourican tomorrow. He only took over that part of the business in 2008, long after the abuse of rates began.

One insider said to me this afternoon it is 'sad that people want the wrong culprits'. But perhaps in being able to announce a high profile departure of a member of staff, who will leave without some of the millions in bonuses he could have accrued, RBS can hope to protect executives even higher up.

Certainly the bank, UKFI, who represents us as shareholders, and the Chancellor have been at pains in recent weeks to try to line up a coordinated response.

George Osborne will deliver a statement to MPs tomorrow. Credit: Reuters

George Osborne will make a statement to MPs tomorrow after the fine is announced. And after the political car crash over Stephen Hester's bonus last year, neither the government nor the bank is keen for a repeat of that crisis.

There is no suggestion that the top executives at the bank knew that traders on dealing floors were breaking the rules and rigging rates. But the tone of the report is critical. It is likely to conclude that rigging of Libor went on at RBS until 2010, and it is possible that it will suggest the bank was slow to respond.

As one insider said, the scandal shows 'poor control' in the group. The tone of what the authorities say will be critical as to whether criticism does reach Stephen Hester's door. And as we are the shareholders of the bank, what happens to him, does affect us all.

File photo of Stephen Hester. Credit: Reuters

The Chancellor is also expected to give more details of what will happen to all the money from the fines. Fines that are paid to the FSA the City watchdog, traditionally go to the FSA itself to help keep costs down for the industry.

But Osborne has already said that Barclays' fines were to go to military charities - tomorrow he'll announce how that idea will be developed for cash that has paid by other banks.

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