* Shares sold at 210 pence per share
* Shares down 2.4 percent on open market to 212.7 pence
* Sale leaves RBS with 28.5 percent stake
* RBS says on track to sell all Direct Line shares by
By Matt Scuffham and Chris Vellacott
LONDON, Sept 20 State-backed Royal Bank of
Scotland said on Friday it raised 630 million pounds
($1 billion) by selling a 20 percent stake in Direct Line
, the latest stage in an EU-ordered disposal of
Britain's biggest motor insurer.
RBS was ordered by European regulators to sell all of Direct
Line - also one of Britain's biggest home and general insurers -
before the end of 2014, as a penalty for its 2008 taxpayer
bailout which left it 81 percent-owned by the government.
"This successful sale keeps RBS fully on track to meet its
obligation to divest its stake in Direct Line by end-2014," said
RBS's Finance Director Bruce Van Saun.
The sale was made at 210 pence a share, a 3.7 percent
discount to Direct Line's closing price on Thursday and leaves
RBS holding 427.4 million shares, a 28.5 percent stake.
A banking source close to the transaction said it was
"comfortably covered" and priced at the top of a 208 pence to
210 pence range with demand for the shares exceeding the amount
being sold within an hour of the sale being announced.
RBS sold just over a third of its interest when it floated
Direct Line last October and it cut its stake just below 50
percent with a share sale in March. At that time it agreed not
to sell any more shares until early September.
RBS said it does not plan to sell any more shares in Direct
Line for at least 90 days. It said the proceeds from the sale
would be used for general corporate purposes.
Shares in Direct Line were down 2.4 percent at 212.7 pence
at 0742 GMT. Shares in RBS were down nearly 1 percent at 365
pence in early trade.
Goldman Sachs, Morgan Stanley, RBC Europe
and UBS were joint bookrunners for the