Taxpayers face £500m bill for RBS Libor fraud British taxpayers are set to pay $800m (£500m) in fines as a result of Royal Bank of Scotland traders" involvement in the Libor interest rate fixing scandal - with nearly all of the money going to the United States. American watchdogs are set to hit RBS with as much as four-fifths of the total penalty as it becomes the third bank to settle over its traders" role in the scandal. The remaining £100m will come from the Financial Services Authority (FSA), which will eventually be returned to UK Government coffers. But people close to the talks told The Independent the figure hadn't been finalised on the American side and could still go higher. MPs tonight warned that the extent of the payouts would infuriate the public after taxpayers stepped in to rescue the bank with a £45bn bailout four years ago. It will also be a fresh blow to attempts by Stephen Hester, the bank's chief executive officer, to rebuild its reputation - and to restore its financial health to a point where the public stake can be sold. RBS is 81 per cent-owned by the Government, which means the taxpayer will effectively foot the bill for its fine, although the bank is expected to attempt to head off protests by cutting its investment bankers" bonus pool. Senior managers may also see some of their bonuses "clawed back." John Hourican, the head of the investment bank, is expected to pay with his job. He is highly unlikely to face any criticism from regulators over the affair, not least because he was not aware of the traders" activities. But the bank is thought to feel that it must show it takes the misconduct of its traders seriously and as a result Mr Hourican, the overall head of the business, will carry the can. It is understood that RBS bosses are keen to avoid any repeat of what happened at Barclays, where the Libor storm ultimately cost the jobs of chief executive Bob Diamond and chairman Marcus Agius. RBS nearly collapsed during the financial crisis, after it spent billions on the ill-advised acquisition of Dutch Bank ABN Amro until the intervention by the last Government. MPs expressed dismay over the looming payment and warned over the new damage it would inflict on the bank's reputation, despite the Libor scandal dating back to Fred Goodwin's stewardship. Andrea Leadsom, a Conservative member of the Treasury select committee, said: "All MPs receive communications from constituents angry that not only has the bank been bailed out, but that the taxpayer is effectively covering the cost of fines for wrongdoing. It compounds the anger people have about the conduct of the bank. Teresa Pearce, a Labour member, said: "We hold an enormous number of shares in that bank which ultimately need to be sold. If its reputation is that there were things going on that shouldn't have been - and other things may still be going on - then the value of those shares will plummet. We need to know the money used to prop it up was well spent. Stephen Williams, the chairman of the Liberal Democrat Treasury committee, said: "It's the shareholders that are suffering - in this case RBS is 80 per cent owned by the people. It is a direct hit on the value of the bank which will eventually be returned to taxpayer. The fine will take the total paid by British banks to US regulators - and therefore US taxpayers in the last year - to more than $3bn. HSBC paid $1.5bn to settle charges that it was used as a conduit from drug money and sanctions busting. Standard Chartered, which is headquartered in London but mainly operates in Asia, paid $667m to various regulators in the US to settle charges of dealings with Iran while Barclays paid $450m over its part in the Libor fixing affair. The Labour MP John Mann, a vociferous critic of the major banks, said: "The key thing is that people are held to account - we need to stop this criminal fraudulent behaviour. If American regulators can take criminal action for fraud, why aren't our regulators taking criminal action as well?