Government-owned lender Royal Bank of Scotland (RBS) could start the process of spinning off its Direct Line Insurance Group by the end of the week, reports indicate.
Quoting persons close to the discussions, news agency Bloomberg claims RBS is poised to sell around a quarter of Direct Line through a stock market flotation to generate around £1.0bn, although no decision has yet been made about either timing or the valuation of the flotation.
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The bank was ordered by the European Union to sell the insurance unit after the bank received state aid.
Earlier this month Direct Line announced plans to cut 900 jobs in a bid to cut costs. Direct Line currently employs 15,000 people and owns brands such as Churchill and Green Flag. More than half of the jobs will go at Direct Line's site in Stockton-on-Tees, which is to be closed.
Direct Line has launched a series of initiatives aimed at saving £100m by the end of 2014.
The flotation is expected to give a boost to the flagging new issues market, and throw a lifeline to struggling brokerages. According to data compiled by Bloomberg, London listed companies have raised just $1.4bn so far this year, compared with $15.6bn in 2011, which was boosted by Glencore's offering which generated $10bn.
RBS shares rose 2.33% to 250.20p by 13:29.
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