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.

Barclays Plc, the second-biggest U.K. bank, agreed last month to pay 290 million pounds ($448 million) in regulatory fines for rigging Libor, spurring resignations of the chairman, the chief executive officer and its chief operating officer. The fines raised speculation about penalties that may be imposed on other banks involved and the cost of lawsuits that follow.