LONDON (Reuters) - Royal Bank of Scotland is braced for fines of between 400 million pounds and 500 million pounds ($803 million) for its role in an interest rate rigging scandal, sources familiar with the matter said.

The partly state-owned bank is expected to agree a settlement with authorities in Britain and the United States next week and will be hit with a worse punishment than rival Barclays, which was fined $450 million last June.

However, the sources stressed the final number had not yet been decided by all of the regulators involved. Although Britain's financial regulator has completed its investigations, probes by U.S. authorities are continuing, they said.

RBS's fines will, however, be well short of the record $1.5 billion punishment which was meted out to Switzerland's biggest lender UBS last month.

RBS declined to comment on the size of the settlement. The bank has said it wants the matter dealt with by the time of its full-year results on February 28.

More than a dozen banks around the world have been scrutinized by regulators as part of an investigation into the suspected rigging of interbank rates, which are used to price trillions of dollars of financial instruments.

RBS hopes to save over 100 million pounds to help pay the fines by slashing bonuses for its investment bankers, a source familiar with the situation told Reuters earlier in January.

The bank is also expected to part company with John Hourican, head of RBS's investment bank, and Peter Nielsen, head of markets, at the time of the settlement.

($1 = 0.6224 British pounds)

(Reporting by Matt Scuffham; Editing by Mark Potter)