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Osborne 'wants bank bonuses to cover US Libor fines'

The Chancellor is understood to have "laid down the law" to RBS in recent days. Credit: Dominic Lipinski/PA Wire

Chancellor George Osborne has told the state-backed Royal Bank of Scotland that bankers' bonuses must cover any international fines imposed for the Libor rate-rigging scandal, a senior Treasury source has said.

Senior RBS figures, bracing themselves for a major penalty from US regulators, were apparently warned that use of taxpayer funds to cover any penalties would be 'totally unacceptable'.

The Treasury source said: "The Chancellor has made it clear that on this occasion the bill for any US fine should be paid for by the bankers, and not the taxpayer."