John Hourican, 41, head of RBS's troubled investment banking division since 2008 will also relinquish share options as he exits the Edinburgh-based banking group over the row.
RBS – which is 81% state-owned – is expected to announce a settlement of up to £500m with US and British authorities today, related to the bank's alleged attempts to rig the benchmark rates.
It is understood the bank's board and regulators recognise Mr Hourican had no involvement in the Libor-rigging misconduct and that his departure is being seen as a sacrificial offering.
It was claimed he would be stripped of his share bonus for 2012, and of around £4m in bonuses due from previous years, in order to help pay the expected fines, most of which will go to American regulators.
However he is expected to receive a year's salary in lieu of notice, estimated to be worth around £700,000.
It also emerged Mr Hourican – who has been at RBS for 17 years – sold shares worth nearly £4.8m after exercising options handed to him as part of his 2009 bonus. Some 17.6 million shares went at a price of 27p, netting him £4.77m.
The shares were awarded in 2009 as a contentious incentive as he took on the task of rebuilding RBS's global banking and markets division. It is understood the shares sold equalled just over 80% of 21.3 million shares granted to him three years previously as part of a controversial multimillion-pound pay package, leaving him with several million RBS shares and options as part of subsequent payouts.
Mr Hourican also cashed in 193,909 shares worth £479,042 in September, last year.
His departure and the cancellation of his share options is expected to be announced today while RBS faces criminal charges and a £500m fine for its role in allegedly secretly manipulating Libor inter-bank lending rates.
RBS has been under intense political pressure to pay the fine with cash from its bonus pot to ensure taxpayers do not suffer and to hold a senior executive accountable.
But there were suggestions that traders are still set to receive bonuses worth hundreds of millions of pounds for 2012.
RBS refused to comment ahead of an announcement to coincide with a statement from British and American regulators expected to reveal the extent of the fines to be imposed on the bank. Chancellor George Osborne warned RBS that the bill for any fine related to the Libor investigation "should on this occasion be paid for by the bankers, and not the taxpayer".
Mr Hourican, who was educated in Ireland and started his accountancy career in Dublin, would be the highest profile casualty at the bank since it was alleged last year that dozens of bankers had wilfully manipulated the key interest rate.
The fine from the UK's Financial Services Authority is thought to be just under £90m, with US regulators levying fines of around four times that.
Libor, a daily average of borrowing costs announced by a panel of London-based banks, is used to calculate payments on hundreds of trillions of dollars-worth of financial contracts.
As part of a settlement deal, a unit of RBS, possibly in Asia, is expected to plead guilty to a crime in the US, according to one insider. RBS executives had been hoping to avoid such a guilty plea, fearing an admission of criminal wrongdoing could prompt some clients to cut ties.
The US Justice Department is not expected to charge any individuals with a crime.
A deal by RBS would make it the third bank to settle Libor-rigging charges, following Barclays and UBS's deals last year.
Meanwhile, the number of people making claims for mis-sold payment protection insurance (PPI) from firms which have gone bust has almost doubled year-on-year, figures showed.
More than 19,000 people submitted cases in 2012, compared with just over 11,000 in the previous year.