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RBS
may abandon insurance business sale December 2008
__________________________________
29th
December 2008: Royal
Bank of Scotland (RBS) may call off the £7 billion
sale of its insurance unit, which includes the Direct Line
and Churchill brands.
The
Sunday Times reported yesterday that RBS, the UK's second
largest banking group, has already rejected an offer for its
insurance business from private equity group CVC Capital Partners.
RBS
said it was unimpressed with the terms offered, and will only
accept a deal if it is in the interests of shareholders.
This
strong rejection makes it increasingly unlikely that RBS will
secure a deal before its deadline in eight weeks.
If
RBS decides to retain its insurance operations, the decision
will be announced in February alongside the company's annual
results.
Churchill
and Direct
Line together contribute a pre-tax profit of around
£1 billion per year, meaning that new chief executive Stephen
Hester is keen to keep them under RBS control.
Nevertheless,
the bank urgently needs to raise funds to counter an estimated
£28 billion loss from exposure to bad debt.
The
bank's 4.3% stake in Bank of China, worth around £1.5 billion,
may be sold instead of the insurance business as RBS seeks
to focus on domestic operations.
RBS
declined to comment on the report.
Source:
Insurance
Daily
See
also:
RBS
rumoured to talking to CVC capital on insurance sale - October
2008
RBS
Considering selling insurance Division - April 2008
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