Royal Bank of Scotland to further reduce stake in Direct Line
13 March 2013
Royal Bank of Scotland has plans for further reduction of its stake in Direct Line, taking advantage of an over 20-per cent rise in the UK insurer's share price following its floatation last year.
The state-backed bank, which sold 34.72 per cent of Direct Line at its stock market debut in October, said yesterday it would sell a further 15.3 per cent or more of the insurer via a placing with institutional investors.
RBS has to sell Direct Line by the end of 2014 as it gives up control by the end of 2013 to comply with a condition set by the European Commission for allowing the bank's bailout by the UK government following the 2008 financial crisis.
At yesterday's closing share price the sale of 229.4 million shares would fetch around £482 million ($718 million) for RBS, which was also under pressure from regulators to boost its capital.
The sale comes with rival British home and motor insurer eSure preparing for its own London listing.
Esure, which like Direct Line was founded by insurance entrepreneur Peter Wood, would debut 22 March, on the market and has already received orders for the minimum number of shares it plans to sell, Reuters reported on Monday, citing sources.