The fine, which will be the highest paid yet by a firm implicated in the rigging scandal, has been agreed by the Financial Conduct Authority in London and US regulators. Since 2012, many banks in Europe and North America have paid billions to regulatory bodies in the UK, US and Switzerland for colluding to manipulate Libor rates.

Barclays was the first bank to be fined, paying around £300m in June three years ago; the Deutsche Bank fine exceeds the £940m penalty paid by UBS to authorities in two years ago.  As part of Deutsche Bank’s plea deal, one of the bank’s British subsidiaries will also plead guilty to fraud.

Deutsche Bank has already paid a €725m fine to the EU for rigging the Euro Interbank Offered Rate, known as Euribor. Last year, the FCA fined the bank £4.7m for failing to report 29.4 million equity swap contracts. This January, it was announced that the bank would be placed under an “enhanced supervision” order, due to continuing concerns over its governance.

Deutsche Bank could plead guilty before the end of April, it has been reported. A spokesperson for the bank said it “would continue to work with the authorities that are reviewing interbank offered rates matters.”

Commenting on the news, Stefan Bongardt of Independent Research GmbH said: “The uncertainty is gone. For Deutsche Bank, Libor is one of the last big legal disputes. There could be relief in the market even if it’s a bit over expectations.”