BANKS linked to the Libor scandal face up to $22bn (£14.3bn) in regulatory fines, legal bills and civil damages, according to the most detailed estimate so far.
The total cost to banks, calculated by Morgan Stanley in what it admits is a “crude” estimate, takes into account the impact the rate-rigging scandal will have on market share and deals for the banks.
Of the sixteen banks involved, it warns that taxpayer-owned bank RBS is likely to face one of the biggest fines, with a legal bill of up to $1bn. Deutsche Bank faces a similar hit, according to the estimates, which say the penalties will reduce 2012 earnings per share by anywhere from two per cent to 33 per cent.
The analysts estimated that regulatory fines and litigation settlements would reduce book value per share by a median of 0.5 per cent in 2012.
Morgan Stanley’s estimates were given in a best-to-worst case scenario for each bank and based on the Barclays agreement, as well as the individual banks’ exposures to Libor-pegged assets.
Other estimates of the final bill have come in higher, with some analysts putting the total across the industry at $200bn or more.