RBS sells Direct Line stake

Royal Bank of Scotland has raised £630 million by selling an 18.2% stake in insurance company Direct Line.

RBS has sold over 272 million shares in Direct Line, taking its shareholding in the insurance company down to 28.5%. Direct Line was floated nearly one year ago at a price of 175p, so with the recent tranche of shares sold at 210p, the sale price was at a 20% premium to the floatation price.

RBS’s disposal of Direct Line is part of its asset-stripping scheme to spin off non-core assets. Over 80% owned by the UK government, the bank is aiming to raise as much money as it can to shore up its balance sheet in order to reduce its dependence on the state.

According to finance director Bruce Van Saun, RBS is on track to unwind its position in the insurer by the end of 2014. As the part-nationalised bank continues to reduce its position in non-core businesses, the government may seek to reduce its holding in the bank, which could boost the share price.

Royal Bank of Scotland Group plc (DFB) chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.