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RBS confirms Direct Line IPO

14 September 2012  |  3992 views  |  0 RBS logo web screen shot

The Royal Bank of Scotland has confirmed plans to offload its Direct Line insurance business in an initial public offering that analysts suggest could be worth £3 billion.

RBS was told to sell off Direct Line by European regulators as part of the 82% taxpayer-owned bank's multi-billion pound state bailout deal following the 2008 financial crisis.

The group - which includes the Direct Line, Churchill Privilege and Green Flag brands - has 4.2 million personal motor and 4.3 million home in-force policies.

It will list on the premium segment of the London Stock Exchange in an all-secondary offering of Direct Line Group shares to be sold by RBS. Eamonn Flanagan, a Shore Capital Group analyst told Bloomberg that the IPO could value the business at between £3 billion and £3.2 billion.

Bruce Van Saun, group finance director, RBS, says: "Direct Line was launched more than 25 years ago as a pioneer of direct motor insurance and it has grown to become the market leader in UK personal lines insurance. We believe it has a strong future as a standalone insurance group continuing to serve its customers well while delivering attractive returns to investors."

RBS shares were up 10.4 pence, or 3.8%, at 284.3 pence per share, in mid-morning trading.

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