A man leaves an RBS building London May 2, 2014.

London - An investigation into alleged manipulation of foreign exchange markets could pose a bigger problem for banks than the Libor interest rate rigging scandal, the boss of Royal Bank of Scotland said on Friday.

RBS paid $612 million last year to settle allegations that it manipulated Libor rates, one of several banks hit with big fines for rigging financial benchmarks.

Regulators are now investigating allegations that traders manipulated key reference rates in the $5 trillion-a-day foreign exchange market.

Asked if the FX investigation could be a bigger problem for the industry than Libor, RBS chief executive Ross McEwan said: “Unfortunately, it has the hallmarks”.

McEwan, speaking on LBC radio, added: “We're still doing a lot of investigation. We're going through just millions and millions of emails, chatrooms, conversations to see what actually went wrong, if anything, in this area.

“Unfortunately, I have the feeling that this is a sort of Libor case again.

“The difference this time is that we haven't sat back and denied it. We've gone into it and are doing the investigation hand-in-hand with the authorities.”

McEwan said it was another problem from the past that banks need to clean up to be able to move on. - Reuters