RBS Sells of 20% of Its Direct Line Stake
Royal Bank of Scotland has announced sale of its 20% stake in Direct Line. The sale raised 630 million pounds.
The action by RBS was taken after receiving an order by European regulators, which said to sell all shares of insurer before the end of next year, i. e. 2014. This action was sought as a penalty of bailout in the year 2008. After the bailout, 81% of Direct Line came under government's control. At present, 49.8% of Direct Line is with RBS.
Direct Line is Britain's largest home and general insurer.
The price at which each share sold off was 210 pence. This was 3.7% less than the insurer's closing price yesterday. After the successful sale of 20% stake, RBS is left with 28.5% stake of Direct Line, which makes for 427.4 million shares.
Sources confirmed that the demand for the shares increased within an hour after the sale announcement and price was hence increased from 208 pence per share to 210 pence.
"This successful sale keeps RBS fully on track to meet its obligation to divest its stake in Direct Line by end-2014," said Bruce Van Saun, RBS's Finance Director.
RBS has declared that the earning made through the sale of Direct Line shares will be invested for the general corporate purposes and will not make the announcement of more shares of the insurer before 90 days from now.
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