Foreign exchange scandal costs RBS another £430m

The fine was agreed after the 80 per cent state-owned lender was joined by Barclays, Citi, JP Morgan Chase and UBS in admitting a US competition law violation relating to the forex market-rigging scandal.

The latest huge penalty to rock RBS comes on top the £399m extracted last November, which were also handed down by authorities on both sides of the Atlantic.

RBS will now pay $395m to the US Department of Justice (DOJ) and $274m to American central bank, the Federal Reserve.

Ross McEwan, chief executive of RBS, said: “Pleading guilty for such wrongdoing is another stark reminder of how badly this bank lost its way and how important it is for us to regain trust.”

He added: “It has taken far longer than anyone hoped to root out all the past conduct problems and practices and as a result we still have significant challenges on the horizon.”

Sir Philip Hampton, chairman of Edinburgh-based RBS, said investigations were continuing into the conduct of employees in the forex business of its investment banking division, and that as a result three people had been dismissed and two suspended from duty.

Meanwhile Barclays, which held off from agreement during the last round of fines last November, agreed a fresh punishment of £1.53bn which includes a record £284.4m inflicted by the UK’s Financial Conduct Authority (FCA).

The bank has now also settled with US agencies the DOJ and the Commodity Futures Tracing Commission.

Barclays chief executive Antony Jenkins said: “The misconduct at the core of these investigations is wholly incompatible with Barclays’ purpose and values and we deeply regret that it occurred.

“I share the frustration of shareholders and colleagues that some individuals have once more brought our company and industry into disrepute.”

The FCA said that traders colluded with each other through chat rooms to rig rates, using aliases such as “the three musketeers”, with one banker saying “we all die together”.

JP Morgan, Barclays, RBS and Citigroup will all plead guilty to conspiring to manipulate the price of US dollars and euros.

Georgina Philippou, the FCA’S acting director of enforcement and market oversight, said: “This is another example of a firm allowing unacceptable practices to flourish on the trading floor.

“Instead of addressing the obvious risks associated with its business Barclays allowed a culture to develop which put the firm’s interests ahead of those of its clients and which undermined the reputation and integrity of the UK financial system.”