RBS moots sale of insurance arm

Royal Bank of Scotland (RBS) is understood to be considering selling its insurance business, which includes the Direct Line and Churchill brands, in a bid to raise money. It is expected to outline strategic options for the division tomorrow (April 22) at its annual meeting.

RBS, Britain’s second biggest bank, is also expected to reveal write-downs of £5bn to £7bn, and will ask shareholders for up to £12bn of new capital.

The insurance arm is valued at £5bn and RBS is reported to have received speculative approaches from AIG, Allianz, Axa and Generali.

The rights issue from RBS is expected to be followed by similar moves from other top UK lenders, including Barclays and HBOS. This week, Chancellor Alistair Darling will also disclose the details of a £50bn government scheme that aims to kickstart the floundering UK mortgage market.


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