Libor scandal: RBS executives under pressure to resign

The pressure comes as RBS is closing in on a settlement with US and UK regulators that is likely to see the state-backed bank fined at least £300m.

John Hourican, head of RBS’s investment bank, and Peter Nielson, head of markets, are understood to be “under pressure” to step down.

Sources suggested Mr Hourican and Mr Nielson were “stunned” and “let down” by the developments, described by one insider as “political convenience for the relentless baying of blood from regulators”.

The two bankers have together earned in excess of £30m in the past four years and were yesterday working as usual in RBS’s London offices. Neither had been asked to offer their resignation.

There is no suggestion that either man knew about the alleged manipulation of Libor. However, RBS and regulators are thought to be concerned over the “culture” of the investment banking division, which allowed Libor-rigging to happen while the two were at the helm.

Traders at RBS are alleged to be among those who fixed global borrowing rates between 2005 and 2010. Mr Hourican has been at RBS for 16 years, but only took over as head of the investment bank in 2008. Stephen Hester, RBS’s chief executive, put Mr Hourican in charge of turning around the business following RBS’s £45.5bn taxpayer-led rescue.

Insiders claimed RBS wants the duo to leave without having to pay out considerable sums and while being in a position to claw back bonuses paid over the past three years. However, they conceded a final decision had not yet been made and that it was possible there was a board-level disagreement over how to respond to the scandal.

Libor-related bonus clawbacks are also expected to affect a wider group of executives.

Mr Hester said last year he would be “disappointed” if the bank were not able to announce at least one settlement over Libor before the release of full-year results on February 28.

RBS has already fired four traders and suspended the head of rates, Jezri Mohideen, while it continues to investigate alleged Libor-rigging. It is thought that the bank will sack a number of other traders, as well as a handful of their managers and one or two “top of the house” senior executives.

“This is a highly politicised time even if you are one of the good guys,” said one senior source, who claimed that the investment bank’s management team had taken a hard line on those involved in alleged rigging , but added: “In the heat of battle, in the darkest moment of RBS’s history there were other things that were prioritised. It was a bust bank .”

The news of RBS’s likely settlement came as it was reported that Deutsche Bank could have made at least €500m (£407m) from trades based on interest rates that are under investigation as part of the Libor inquiry. RBS declined to comment.