Bankinter approaches RBS on sale of Linea Directa
by Gill Montia
Royal Bank of Scotland (RBS) is reported to have been approached by Bankinter of Spain about the sale of its stake in Linea Directa, the Spanish insurance business held as a 50/50 joint venture between both banks.
RBS is auctioning its insurance operations in efforts to raise around £4 billion to improve its capital position. The formal process should begin this week.
The bank’s entire insurance business is worth around £7 billion and the offer from Bankinter is understood to value Linea Directa, which holds around 5% of the Spanish motor insurance market, at up to £700m.
RBS’s insurance business also includes Churchill, Direct Line, Privilege and NIG.
There would be advantages to RBS in selling them as one entity; however NIG is unlikely to prove attractive to bidders because it sells through intermediaries and is believed to have been loss making in recent times.
A number of private-equity groups are reported to be interested in the auction, as is Generali of Italy and investment firm, Berkshire Hathaway.