RBS fined $612 million for rate rigging

RBS became the third bank to pay fines in the Libor scandal.

The British bank, which is 82 percent-owned by the state after the world's costliest bank bailout in 2008, said on Wednesday it was cutting bonuses to help pay for the fine, in a bid to avoid a public backlash.

The bank fears the scandal will embolden critics who want it to further shrink its profitable investment bank and focus on basic lending at home.

"What happened at RBS and other banks is totally unacceptable," Britain's finance minister, George Osborne, told reporters.

Britain's Financial Services Authority (FSA) signalled more large fines were in the offing.

"The size and scale of our continuing investigations remains significant," said Tracey McDermott, director of enforcement and financial crime at the FSA.

More than a dozen banks and brokerage firms, including JP Morgan, Deutsche Bank AG and Citigroup Inc , are being investigated by regulators over the manipulation of benchmark interest rates such as the London interbank offered rate, known as Libor, and Euribor, which are used to price trillions of dollars' worth of loans.

For their roles in the Libor scandal, Switzerland's UBS AG agreed in December to pay penalties of $1.5 billion, and Britain's Barclays Plc has paid $453 million.

Deutsche Bank has suspended five traders in connection with alleged manipulation of Euribor, a

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