UPDATE 2-RBS extends insurance auction into June
(Writes through with details, background)
By Clara Ferreira-Marques and Chris Wills
LONDON, May 29 (Reuters) - Initial, informal offers for Royal Bank of Scotland's (RBS.L) insurance arm are unlikely before next week after a first deadline was delayed on the request of several suitors, sources close to the process said.
First-round bids for RBS Insurance, Britain's largest motor insurer, had initially been expected by late afternoon on Wednesday, but that deadline had already been described then by sources close to the matter as "fluid".
Some potential bidders have also asked Britain's second-largest bank for more information on the unit.
"The vendor will always do what it can to ensure offerors have as much time as possible to pull together sensible proposals," one of the sources said.
The sources said on Thursday at least four bidders were expected to put in offers for the unit, valued at around 7 billion pounds ($13.8 billion), with Zurich Financial Services (ZURN.VX) still seen as the front runner.
Eight players had initially been expected to compete for the much-coveted insurance business, which includes brands Direct Line and Churchill as well as European operations, but Warren Buffett's Berkshire Hathaway (BRKa.N) and Italy's Generali (GASI.MI) have both said they are no longer in the running.
Sources close to the matter said on Wednesday Generali had pulled out as it had struggled to reconcile a hefty price tag with thin margins in the ultra-competitive UK motor market, and due to RBS's unwillingness to allow buyers to cherry-pick the unit's assets.
U.S. giant AIG (AIG.N) and China's Ping An (2318.HK) are also understood to have left the race, leaving Allianz (ALVG.DE), whose interest is also said to be lukewarm, U.S. insurers Travelers (TRV.N) and Allstate (ALL.N) and Zurich.
Zurich, which already has a growing UK presence, has the necessary financial firepower while much of the rest of the sector is under pressure and hired RBS Insurance's former boss in 2006. Buying the RBS unit would propel it to the top of the pile in Europe's most competitive general insurance market.
RBS declined to comment on the auction. Zurich also declined to comment.
RBS put its insurance arm on the block last month as part of efforts to shore up its balance sheet, battered by the credit crunch and the bank's part in the ambitious takeover of ABN AMRO last year, which also include a 12 billion pound cash call.
It hopes to have news on the sale process and a possible shortlist by the time it publishes interim results in August.
Separately on Thursday, the bank sold A$1.125 billion bonds to over 30 investors to fund its Australian lending operations. For more, click on [nSYD98792]. (Additional reporting by Sam Cage in Zurich; editing by Sue Thomas)
