Royal Bank of Scotland is to pay £390m (€450.8m) to regulators in the US and UK to settle its involvement in the Libor-rigging scandal.

RBS has agreed to pay the UK's Financial Services Authority £87.5m, the US Commodity Futures Trading Commission £208m and the US Department of Justice £95.8m for Libor fixing.

Royal Bank of Scotland said that John Hourican, the Dublin-born head of its investment bank, had agreed to leave following the misconduct of staff in that business.

He will forfeit his 2012 bonus and long-term incentive shares.

RBS is the third bank to be punished following investigations into rate-fixing by authorities around the world.

Switzerland's UBS agreed to pay £940m to settle charges while Barclays paid approximately £290m.

RBS said it will recoup around £300m from its staff bonus pool and by clawing back previous awards.

The UK's FSA said that individuals involved in the misconduct were located in the UK, Japan and Singapore.

The London interbank offered rate, or Libor, provides the basis for trillions of dollars in contracts around the world, including mortgages, bonds and consumer loans.

Britain’s Chancellor George Osborne said the behaviour at RBS in relation to Libor was "totally unacceptable".

He also insisted the British taxpayer would not pick up the bill for wrongdoing.

Speaking at a press conference this afternoon, Mr Osborne said: "What happened at RBS and other banks is totally unacceptable. At my insistence the banks not the taxpayers will pick up the bill...

"Those responsible will face the full force of the law."

Mr Osborne said it was "right" that the RBS management had taken action.

He also said the money from the fines would go to people who had showed the "best of British values", including those who had fought for the country.