Allstate leads RBSi bids

Allstate, the US insurance giant, has brought in investment bank JPMorgan, alongside advisers Lehman Brothers, to arrange the financing for its estimated £7bn tilt at Royal Bank of Scotland's insurance arm (RBSi).

Allstate is thought to be the front-runner in an auction for the unit, with Zurich pulling out of the running last week.

The interest of the remaining bidders, Germany's Allianz and the American Travelers group, is thought to have cooled. Allianz's sale of its Dresdner banking arm is thought to have scuppered its chances of making a serious offer.

However, sources close to the deal believe that Sir Fred Goodwin, chief executive of RBS, is increasingly likely to pull out of a sale, with indicative bids thought to be some way short of the asking price.

"This deal will only happen if Fred needs the extra cash to shore up the balance sheet further," said a source.

The London-based corporate adviser Fenchurch, which counts Ian Chippendale, the former boss of RBS's insurance division, among its number, is also part of the Allstate advisory team.