RBS to sell another stake in Direct Line for £500m
Royal Bank of Scotland plans to raise a further £500m by selling another stake in its Direct Line motor insurance division.
The bank, which is 81 per cent owned by the taxpayer, said it was offering 229.4 million shares in Direct Line, which has seen its price surge since it was listed on the London Stock Exchange in October.
If all the shares being offered are sold, RBS would still retain a 49.9 per cent share of the insurer. The stake sale accounts for 15.3 per cent of Direct Line's shares.
European regulators had forced RBS to dispose of Direct Line as a condition of its 2008 bailout.
Its smaller rival Esure, which is run by Direct Line's founder, Peter Wood, is on track to float over the next few weeks. It will use the £50m it raises from the float to pay down debt and expand market share.
Last week, Paul Geddes, Direct Line's chief executive, said: "There is no room for complacency as we face a competitive market, particularly in UK motor, where there are also expected to be significant legal reforms. Our transformation plans target further benefits and we have made substantial progress on our target to achieve £100m of annual cost savings in 2014."
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