Sale of RBS insurance arm progressing

| May 27, 2008 | 0 Comments

The sale of Royal Bank of Scotland’s (RBS) insurance business is pressing ahead with seven bidders interested.

Goldman Sachs and Merrill Lynch, which are advising RBS, are believed to have shortlisted a number of interested parties for its £6 billion insurance business to seven, ahead of the first-round auction deadline tomorrow.

However, the shortlist does not include any bids from private equity groups as they have been excluded from making offers over concerns they would be unable to raise sufficient funds.

Churchill and Direct Line are believed to be frontrunners while European insurance heavyweights Switzerland’s Zurich, Italy’s Generali and Germany’s Allianz group are also on the list.

Furthermore, there is speculation that wildcards could emerge from China, with RBS’s joint venture partner in the region, Bank of China, and the People’s Republic’s insurance giant Ping An possibly in the running.

US billionaire investor, Warren Buffett, last week confirmed that he would not be pursuing RBS Insurance after news emerged that he could bid via his investment vehicle, Berkshire Hathaway.

In addition, Aviva, the UK’s largest insurer, took itself out of the bidding.

RBS recently announced it was to raise £12 billion via a rights issue designed to shore up its balance sheet.

It is understood that RBS is ready to sell its 50% stake in Linea Directa, an insurance joint venture with Spanish online bank, Bankinter.


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