Banking News RBS To Abandon 7billion Pound Sale Of Churchill And Direct Line Insurance Brands 2698
RBS to abandon £7billion sale of Churchill and Direct Line insurance brands
29 December 2008 / by Rachael Stiles
The bank put its insurance operations up for sale earlier in the year in an attempt to encourage shareholders to back a rights issue, but when this failed, RBS had to be bailed out by the taxpayer.
Now owned by the taxpayer to the tune of around 60 per cent, RBS is under the leadership of new chief executive Stephen Hester, who, it has been reported by the Guardian, has halted the sale of the RBS owned insurance brands Churchill and Direct Line, which potentially could have raised £7billion.
In his role of securing the bank’s future, Mr Hester has moved the focus of RBS’ business model from its international exploits to closer to home, concentrating on its domestic insurance businesses which generate considerable revenue for the bank.
The second-largest insurer in the UK, RBS is the most popular car insurance provider in Britain, and it has also grown to be a prominent provider of pet insurance, travel insurance and home insurance.
Since the insurance assets were put on the market in March, they have accumulated a list of potential buyers, but Hester is now thought to be considering the sale of other assets, especially its international endeavors such as a 4.3 per cent stake in the Bank of China, which is reportedly worth in excess of £1.5billion.
One of the most promising buyers for its insurance brands, Zurich Financial Services, pulled out of the deal in the summer, and it has been reported that RBS has rejected an offer from CVC Capital Partners over the weekend.
Although it is still said to be in negotiations with private equity house BC Partners, it is expected that RBS will completely abandon the sale, amid rumours of a profit warning for the new year.
© Fair Investment Company Ltd