Eight banking giants were slapped with a record £1.4 billion fine yesterday for forming cartels to rig interest rates.

The banks, including RBS, have agreed penalties with the European Commission (EC) over allegations they formed cartels to fix two key benchmark interest rates used to set the price of trillions of dollars of financial products, from mortgages to complex financial products.

But the penalties imposed by the European regulators were described by one expert to be as "pointless as those imposed on millionaire footballers for being naughty."

RBS will pay £325 million for its role in the attempted rigging of the Yen Libor and Euribor - the Tokyo and euro area equivalents of the London interbank offered rate (Libor).

But Barclays is immune from a potential £573m penalty after blowing the whistle on the Euribor cartel.

The sanctions - the first from the EC on rate manipulation - are the highest yet for European antitrust enforcement.

Barclays and state-backed RBS have already been fined after an investigation into Libor rigging, paying penalties of £290m and £391m respectively.

Fellow British bank HSBC is understood to have pulled out of the Euribor settlement talks, but the commission said cartel investigations involving it would continue.

EC vice-president in charge of competition policy Joaquin Almunia said: "What is shocking about the Libor and Euribor scandals is the collusion between banks who are supposed to be competing with each other. Today's decision sends a clear message that the commission is determined to fight and sanction these cartels in the financial sector."

However left economist Roger Seifert said there was nothing surprising at all in the revelations and rubbished the financial punishments used to keep the banks in line.

He said: "This is neither a punishment to fit the crime, nor a prevention of further malpractice. The cartel-like rigging is the norm. The banks shun competition and seek market regulation by the few to prevent the democratic state from controlling any aspect of their behaviour."

The Unite union, which represents bank workers, demanded that "the fines imposed for the appalling behaviour at the top of these financial institutions come from the massive boardroom bonuses of the executives and not by further slashing bank staff."