RBSI back on the market

The UK’s second largest insurer, RBSI, was expected to return to the market this week following further government aid to its parent bank RBS.

The bank has come under pressure from the Treasury and Brussels to sell the insurance group, which includes household names Direct Line and Churchill, as a condition of a further £19bn of state aid.

RBS will also have to sell its Scottish branches of NatWest, according to reports this weekend. A government announcement is expected this week.

Meanwhile, Lloyd’s banking group could also be forced to sell off various assets as the government seeks to increase competition on the High Street and ensure no financial institutions are “too big to fail”.

The European Commission has been pressing for penalties on all banks bailed out by the state.

RBSI was on the market for several months at the end of last year and beginning of this, but the bank failed to find a buyer. Incoming chief executive Stephen Hester took it off the market in February.

An RBS statement said: “Negotiations between HM Treasury and the EC are in their final stages and will include some divestments not initially contemplated. It remains RBS’s goal that any required divestments do not threaten its recovery plan which is already underway.”