[ by Howard Haykin ] Royal Bank of Scotland is expected to agree to a settlement sometime in the next 2 months with both U.S. and UK regulatory authorities that currently are investigating RBS's role in the Libor interest-rate rigging scandal, Reuters reports on Friday. RBS, which is 82% owned by the U.K. government, is shooting for an early Q4 settlement. Lawyers said it is likely to be the next bank to settle among all of those being pursued by regulators, with the government keen to protect the value of its stake by removing uncertainties over the issue. "They are state-owned, they are under more pressure than most to deal with this," said one London-based lawyer connected to Libor cases.   [C-I Note: Yet, C-I believes that most of the interest in reaching a settlement is RBS Chief Executive Stephen Hester, who has worked tirelessly these past 2 years to bring a sense of integrity and openness throughout the organization.] CEO Stephen Hester had earlier told reporters, "We will stand up and take any punishment that comes our way." The Expansive Investigation. More than a dozen banks are under investigation by regulators in the United States, Europe, and Asia for suspected rigging of London interbank offered rate, or Libor, and other similar rates which are used to price trillions of dollars worth of financial products. Reuters reported in July that RBS and Switzerland's UBS were 2 of the banks that had played a central role in the manipulation of rates - even though Barclays was the first to settle over the issue, paying record fines totaling 290 million pounds ($461 million) in June following investigations by U.S. and UK authorities. However, British Lawmaker, John Mann, who sits on parliament's finance committee, reckons that RBS could be subject to a worse punishment than Barclays.  He added: "That's what I'm hearing. The suggestions being made are that RBS was more chaotic than Barclays, the whole way they were operating and, therefore, whatever was being done, RBS was doing it more crudely." RBS's Possible Breaches. The revelation of the extent of RBS's involvement could pile more pressure on Chief Executive Stephen Hester. The bank is also facing punishment over possible breaches of sanctions on Iran and Hester agreed to forego his bonus for the second year running following a computer systems failure in June which caused massive disruption to millions of customers. Shares in RBS were trading down 2.8 percent at 221.5 pence by 1430 GMT, compared with a 1.3 percent decline in Europe's bank sector. The UK taxpayer is sitting on a loss of 25 billion pounds on its investments in the bank in 2008 and 2009. Mann called on British finance minister George Osborne to confirm whether or not he had been briefed on the extent of RBS's involvement in Libor fixing. The Treasury had no comment on Mann's remarks. RBS confirmed earlier in August it had dismissed staff in relation to the Libor scandal but gave no indication as to whether it might settle soon with investigators. The bank said it was co-operating with governments and regulators in the United States, Britain and Japan and with competition authorities in Europe, the United States and Canada. A group settlement is one option banks had looked at. But this would mean lumping together banks which offended to different degrees, and those that did not have an endemic problem across the firm are unlikely to want to do so, the sources said. RBS and UBS traders are a focus of the global investigation because of their alleged involvement in seeking to influence yen-denominated rates. A former RBS trader based in Singapore alleged this month in a wrongful-dismissal lawsuit that the bank's internal procedure in London seemed to be that "anyone can change Libor." For further details, go to: [Reuters, 8/24/12].