Banks Face Legal Tab for Libor

RBS, Deutsche Bank likely to see the highest costs related to Libor probes, Morgan Stanley says.

Royal Bank of Scotland Group Plc and Deutsche Bank AG may face the highest litigation costs of 16 banks that face potential fines and lawsuits for rigging benchmark interest rates, Morgan Stanley analysts estimate.

Legal expenses stemming from probes into manipulation of the London interbank offer rate, or Libor, could range from $59 million for Lloyds Banking Group Plc to as much as $1.04 billion for Deutsche Bank and $1.06 billion for Edinburgh-based RBS, according to estimates published today by Morgan Stanley’s Betsy Graseck in New York and Huw van Steenis in London. The costs probably would apply in 2013 and 2014, they wrote.

Total Impact

Overall, regulatory fines probably will reduce 2012 earnings per share at implicated banks by 7 percent to 12 percent, the analysts estimate. On top of that, litigation costs could reduce earnings per share by 7 percent over 2013 and 2014, according to the report.

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