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RBS 'fears criminal charges would drive off customers' as LIBOR rate-rigging deal nears

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By Noel Young | Correspondent

January 29, 2013 | 2 min read

A unit of the Royal Bank of Scotland Group, embroiled in interest-rate-rigging allegations,could be forced to plead guilty to criminal charges in addition to paying a penalty, the Wall Street Journal says today.

RBS Group: a criminal penalty?

RBS executives are said to be resisting any guilty plea "fearful that it could lead clients to cut off activity with the bank and that it could increase exposure to costly litigation,"according to people familiar with the situation.

The negotiations reflect "a newly tough stance" by U.S. authorities,says the WSJ, who have faced criticism for rarely pursuing criminal action against big banks.

The settlement is likely to include £500 million ($790 million) in penalties levied by U.S. and British authorities, although the exact amount remains in flux, these people said. The deal, under negotiation since last autumn, could be completed within the next two weeks.

RBS would be the third bank to settle allegations that its employees tried to rig the London interbank offered rate, or Libor. Barclays and UBS last year agreed to pay a total of nearly $2 billion to settle such allegations.

U.S. prosecutors are pushing for a unit of RBS—possibly one based in Asia, where some of the alleged rate-rigging took place—to plead guilty to trying to manipulate rates as part of the settlement, these people said.

RBS is 82% owned by the British government and is the owner of Citizens' Bank in the Eastern US.

As part of UBS's settlement last month, the Swiss bank's Japanese unit pleaded guilty to wire fraud, a felony.

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