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By Bloomberg

Royal Bank of Scotland Group Plc brings the amount British banks have set aside in the first quarter to cover the cost of settling probes of whether traders manipulated key currency benchmarks to more than $1.7 billion.

The Edinburgh-based lender took a 334 million pound charge ($516 million) for alleged foreign-exchange market rigging, adding to an 800 million pound provision taken by Barclays Plc on Wednesday. RBS said it’s in “advanced” talks with the U.S. Department of Justice to settle the probe.

RBS, Barclays and HSBC Holdings Plc have made provisions for or paid fines totaling about 3.6 billion pounds since authorities began a global probe two years ago. The DOJ is seeking about $1 billion each from global banks being investigated, according to people familiar with the matter. RBS Chief Executive Officer Ross McEwan told reporters on Thursday he expects the fine to be less than that.

“Barclays’s problems are more serious because they didn’t join the group currency settlement last year and are regulated in New York, whereas RBS isn’t,” said Sandy Chen, an analyst at Cenkos Securities Plc in London. “It looks like regulatory charges will be an ongoing burden.”

Rising legal bills and restructuring costs are undermining British banks’ efforts to shore up earnings. RBS on Thursday reported a first-quarter net loss of 446 million pounds after a profit of 1.2 billion pounds in the year-ago period, missing analyst estimates. The lender set aside a further 856 million pounds in conduct and litigation charges in the period.

Guilty Pleas

Barclays on Wednesday reported a pretax profit including provisions of 1.3 billion pounds in the first quarter, down from 1.8 billion pounds a year earlier. The bank has set aside about 2.1 billion pounds to cover a currency-rigging settlement.

Authorities around the world are probing the $5.3 trillion- a-day currency market. Six banks including RBS agreed to pay $4.3 billion in November in an initial round of settlements with some authorities. Criminal and antitrust authorities continue to investigate the allegations.

The Justice Department is pressing to resolve the probe with settlements that include guilty pleas from some of the institutions and penalties of roughly $1 billion for each bank, with some being asked for more and some for less, people people with the negotiations have said. The government also has said it’s preparing cases against individuals.

“It will be out in the next couple of months, we’re still in final discussions with the DOJ,” RBS Chief Executive Officer Ross McEwan, 57, said on a call with reporters on Thursday. He said any fine would probably less than $1 billion but is yet to be finalized. “There are still many conduct and litigation hurdles looming on the horizon.”

RBS, Britain’s largest government-owned bank, paid $634 million to two regulators as part of last year’s settlement. HSBC, which is scheduled to release first-quarter earnings on Tuesday, was fined $618 million to close its role at that time.

Barclays is now in “fluid, real-time dialogues” with regulators over reaching a deal, Finance Director Tushar Morzaria told reporters on Wednesday.

“We are working as hard as we can to expeditiously resolve this matter,” Morzaria said, without elaborating.