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Zurich withdraws from RBS insurance arm bidding

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by Kay Mitchell

A further bidder has withdrawn from buying the insurance arm of the Royal Bank of Scotland (RBS).

Swiss insurer, Zurich Financial Services Group, has decided to opt out of the bidding. A source close to the situation said negotiations collapsed due to price. Zurich was prepared to offer up to £5.5 billion for all of RBS insurance, however, RBS was looking to sell for up to £7.5 billion.

However, Zurich has stated that it will start buying back shares again today under an ongoing repurchase program.

Zurich joins a growing list of other companies who have removed themselves from the bidding including AIG, Generali, Ping An and US billionaire Warren Buffett‘s Berkshire Hathaway Group.

Questions are being raised over the viability of RBS’s proposed sale of the division, which includes Churchill, Direct Line, Privilege, UKI and NIG.

The announcement is certain to be a disappointment for RBS as the amount of bidders has dwindled to just 3 from 15.

RBS declined to comment on Zurich’s withdrawal.

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News posted: July 11, 2008

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