Bank 'may scrap insurance sell-off'
Updated on 17 August 2008
The Royal Bank of Scotland could abandon the sale of its insurance arm after raising close to £6 billion through the sale of risky loans, a report said.
The group has been pursuing the sale of the division - which includes Direct Line and Churchill - for an estimated £7 billion.
But RBS has slashed its exposure to billions of pounds worth of loans used to back private-equity deals and is in talks to sell more risky assets to the investment firms Apollo and Blackstone, the Sunday Times said.
Together with the recent £950 million sale of its half share in Tesco Personal Finance and the disposal of Angel Trains, the moves have strengthened RBS's finances.
The Sunday Times said although no final decision has yet been taken, it was increasingly likely that the insurance auction would be delayed or abandoned.
American insurer Allstate tabled a bid two weeks ago, the paper said, which is thought to have fallen at least £1 billion short of the original asking price.
After unveiling a £691 million first half loss earlier this month, RBS chief executive Sir Fred Goodwin said the group was still in talks over the sale of its profitable insurance arm.
"I think it's in everybody's interest that we pursue that deal," he said. "It is a very good business. But we are not going to sell it for anything other than the right price."
RBS Insurance, which boasts more than 21 million policies, made an operating profit of £403 million during the first half of this year, up from £258 million in the previous year.
The business was up for sale in April when RBS announced a £12 billion rights issue to help shore up its balance sheet.
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