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.