SPANISH firm Bankinter has become the latest company to enter the battle for Royal Bank of Scotland's insurance business, after approaching the Edinburgh institution about buying out its motor insurance joint-venture partner.
The Madrid-headquartered bank already has a 50 per cent stake in Linea Directa, which controls 5 per cent of the Spanish motor insurance market.
Bankinter has reportedly made a tentative approach to RBS, which values Linea Directa at £700 mil
lion. Both banks declined to comment on the reports.
But an RBS source said a deal with Bankinter was thought to be "logical" – with a sale to a joint venture partner easier to conduct than to an outside company.
Last month, RBS said it was selling assets to raise £4 billion to improve its capital position.
Since announcing the sale, alongside a £12bn rights issue, the insurance businesses – which include the Direct Line and Churchill brands – have become some of the most sought after assets on the market.
Reports claim up to 15 suitors have expressed an interest in buying various parts of the businesses, including Berkshire Hathaway, the firm founded and run by US investment guru Warren Buffet, who is one of the world's richest men.
But some analysts have warned that the sheer efficiency of RBS's insurance operations might put potential bidders off. Keefe, Bruyette & Woods said in a recent note that while the assets were a "great opportunity" which would prompt strong interest, "nothing will change the fact that UK retail motor is ex-growth in terms of policy count, that RBS Insurance is already one of the most efficient underwriters and that the industry is one of the most commoditised in Europe," limiting potential synergies.
RBS has insisted that there will be no fire-sale of its assets. The group is aiming to raise its tier one capital ratio to above 6 per cent by the end of the year, but says the sales are not essential to its achieving this.
A spokeswoman said, however, that to prevent uncertainty at the businesses , the group "won't be hanging around" and would aim to have the sales completed or dropped this year.
FREE ACCOUNTS ON WAY OUTROYAL Bank of Scotland's last remaining customers with free business banking accounts are being migrated to fee-charging accounts. The accounts are a legacy of the 1990s, with customers now offered accounts with flat monthly fees and/or transaction charges. A spokeswoman for RBS said the move affected "a few thousand" of its more than one million business customers. The changes are part of an overhaul of the group's small business product offering, with most small business opting for online and phone banking.
The full article contains 454 words and appears in The Scotsman newspaper.
