* RBS to sell 20 percent stake in insurer
* Sale will cut RBS stake to under 30 pct
* RBS must sell all of Direct Line by end-2014 under state
(Adds details, share price)
By Steve Slater
LONDON, Sept 19 State-backed Royal Bank of
Scotland is selling shares worth about 630 million
pounds ($1 billion) in insurer Direct Line Group,
putting it on course to shed all of its holding well before a
regulatory deadline to do so.
RBS said late on Thursday it is selling 300 million Direct
Line shares, including an over-allotment option set aside to
meet strong demand, which in total represents 20 percent of the
It would leave RBS holding 427.4 million shares, or a 28.5
RBS has been ordered by European regulators to sell all of
Direct Line - Britain's biggest motor insurer and one of the
biggest home and general insurers - before the end of 2014, as a
cost of taking a taxpayer bailout during the 2008 financial
It 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.
The sale will be made to institutional investors, probably
before Friday's opening. It will have a minimal impact on the
capital position of RBS, as the shares are being sold at close
to the price they are valued on the bank's books.
RBS is 81 percent owned by the British government and
European regulators ordered it to sell several businesses. The
bank is shrinking its remaining business to focus mainly on
retail and corporate banking in Britain.
Its turnaround is taking longer than that of rival Lloyds
Banking Group, which was also bailed out in 2008.
Britain sold shares in the lender earlier this week.
RBS said it does not plan to sell any more shares in Direct
Line for at least 90 days.
Goldman Sachs, Morgan Stanley, RBC Europe
and UBS were joint bookrunners for the
The shares are expected to be placed at a discount to
Thursday's closing price of 218 pence. The discount is typically
2-4 percent, which would value the stake at 630 million pounds.
($1 = 0.6226 British pounds)
(Editing by Anjuli Davies and Anthony Barker)