RBS to sell 300 million shares in Direct Line Insurance Group
The sale will reduce RBS stake in the insurer to 28.5 per cent.
The Royal Bank of Scotland (RBS), which is 81 per cent owned by the British government, intends to sell 300 million shares worth about £630m ($1bn) in general insurer Direct Line Insurance Group to institutional investors.
After the sale, RBS will have about 427.4 million shares in the insurer, or a 28.5 per cent stake. The sale is said to have a minimal impact on the capital position of RBS.
RBS said that the offer price will be determined by means of an accelerated book-build offering process that will begin immediately. The shares are expected to be placed at a discount to closing price of 218 pence on Thursday, reported Reuters.
As per the European Union (EU) ruling, the banking group should sell all of Direct Line by the end of 2014 to repay financial package (bailout) of £45bn it received from the taxpayer at the peak of financial crisis in 2008.
In October 2012, the banking group disposed a 34.7 per cent stake in the insurer, while in March this year it sold a further 16.8 per cent holding. The latest sale of 300 million shares will represent about 20% stake of Direct Line.
The banking group, which committed not to sell any more shares in the insurer for at least 90 days after completion of this sale, has reached agreements with Goldman Sachs, Morgan Stanley, RBC Europe and UBS to act as joint book-runners and placing agents.
Earlier this week, the UK Financial Investments (UKFI) said it will sell about 6 per cent of placing shares in Lloyds Banking Group held by HM Treasury, marking the beginning of the bank’s privatisation process. At the peak of financial crisis in 2008, the UK government pumped in £20.5bn into Lloyds.