Treasury confirms RBSI sale

RBS and HM Treasury (HMT) have confirmed the revised government asset protection scheme (APS) deal will force the sale of RBS insurance (RBSI), including Direct Line, Churchill, Privilege, Green Flag and NIG.

The bank has until 2013 to sell the business, which is believed to be valued at around £6bn.

RBS warned that the deal could still be scuppered. “While the State Aid proposals follow substantial discussions with the EC and HMT, RBS notes that the Restructuring Plan is subject to a decision by the College on the compatibility of the overall RBS aid package with the State Aid rules and, therefore, at this stage there can be no certainty as to the outcome of the State Aid proceedings and the content of the final Restructuring Plan.

Stephen Hester, RBS Group CEO, said: "The agreement in principle reached with the EC is clearly more material for the structure of our Group than we had hoped, increasing risk to both execution of the Plan and earnings dilution. But this is still an acceptable result for RBS.

“Whilst the required divestitures include businesses which were part of our plans going forward, the Group's essential strengths remain intact and the divestiture proceeds will help our future capital position, bringing forward the prospect of exit from APS altogether.

Disciplined sell-off

"That said, we will approach the divestments in a disciplined and thoughtful way over the next four years and continue to exercise strong and responsible stewardship of each of these businesses. As and when they move to new ownership, we will do this in a way that minimises disruption for our customers and staff and costs for our shareholders."

Lloyds Banking Group, which has numerous insurance assets, including a stake in Esure, has also been ordered to make divestments.