RBS may offload insurance arm for £6bn
Royal Bank of Scotland (RBS) is believed to be in talks to sell its insurance operation to private equity firm, CVC, and Swiss Re for £6 billion.
The division, which includes the Churchill, Direct Line, Privilege, UKI and NIG brands, was put up for sale earlier in the year, at a cost of around £7 billion.
The sale would provide a much-needed injection of capital for RBS, which is due to receive a £20 billion injection from the Government, which will result in taxpayers owning approximately 60% of the bank.
RBS, which is Britain’s second-largest bank, has been hit hard by the banking crisis. RBS chief executive, Sir Fred Goodwin, is to part ways with the bank after it had no option but to turn to the Government for help. Chairman, Sir Tom McKillop, will also step down.
Meanwhile, earlier this month, the bank had its credit rating cut by Standard & Poor’s for the first time in a decade. RBS was downgraded to A+ from AA-.
Following today’s news of the potential sale of its insurance division, shares in RBS recorded their sixth largest daily percentage rise ever.
However, today Credit Suisse analysts reduced their price target for RBS from 120p to 70p, and issued a cautious note on the entire sector, despite the UK Government’s bailout package.
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