Royal Bank of Scotland Group Plc is selling most of its remaining stake in Direct Line Insurance Group Plc, valued at as much as 1.1 billion pounds ($1.8 billion).
RBS is selling 423.2 million Direct Line shares, or 28.2 percent, to investors, the Edinburgh-based lender said in a statement today. The stock is being offered at 256 pence “to market,” according to the terms obtained by Bloomberg News. Goldman Sachs Group Inc., Morgan Stanley and UBS AG are joint bookrunners on the transaction.
Direct Line, the U.K.’s biggest home and car insurer, rose 0.8 percent to 263 pence in London today, extending its rally this year to 5.4 percent.
RBS, Britain’s biggest government-owned bank, has to sell the insurer to comply with European Union rules after receiving a 45.5 billion-pound bailout in 2008 and 2009. Direct Line, which sold shares to the public in 2012, today reported full-year pretax profit of 423.9 million pounds and declared a final dividend of 8.4 pence a share and a special dividend of 4 pence.
“Although this disposal by RBS was anticipated, the U.K. bank picked an interesting time to execute the move as many pinned it for end of 2014,” Joe Rundle, head of trading at ETX Capital in London, said in e-mailed comments. “The move could be political, readying RBS for privatization, or at least speeding the process.”
RBS will retain 4.2 million shares to pay for long-term bonuses to Direct Line executives, the company said.
The bank is scheduled to report full-year earnings at 7 a.m. local time.