Sell out

It’s finally over. After months of speculation, RBS has confirmed that it will not be selling its insurance business after all. Following near financial meltdown, part nationalisation and, crucially, a change in leadership, the bank is holding on to the biggest names in personal lines insurance.

But why? The chances are it couldn’t sell them at a realistic price. Firstly, the many trade buyers that were initially linked with the sale pulled out, scared off by the hubristically high price tag of up to £7bn and spooked by the early stages of the subprime crisis. RBS, which had initially attempted to exclude private equity buyers from the sale, was sent back cap in hand. For a while, the smart money was on CVC Capital, which is believed to have got to the stage of making an offer. But it was too low and the bank, now answerable to the tax payer, said no.

Which left Apollo Management and BC Partners in a joint bid. Reportedly, they put £5bn on the table last month – but as ever, timing is all. With the government firmly behind it, and former chief executive Fred Goodwin out the door, the strategy under new chief executive Stephen Hester is looking very different.

For the staff and customers of RBSI, the focus now must be on rebuilding a business that has been in limbo for nearly a year. One of the UK’s largest insurers, it has been totally concerned with internal matters since this sale was announced. Now it can get back into the fray and start shaping the market again. Will Direct Line make serious inroads on commercial business? Will it merge with Churchill? Will NIG win back the trust of brokers? And could RBS even consider further acquisitions. Watch this space: the RBS story has only just begun.