RBS prices Direct Line at 175p

Royal Bank of Scotland(RBS) said it had priced Direct Line at 175p a share, valuing the insurance firm at over 2.6 billion pounds.

The offer comprises 450m existing shares, representing 30 per cent of the 1.5bn total, raising RBS £787m.

RBS had said it would float the firm at between 160p and 195p a share.

Following admission, the bank will continue to hold 65.3% of the total shares in Direct Line, which owns the Churchill and Privilege brands as well as the breakdown service Green Flag.

RBS Group Finance Director, Bruce Van Saun, said the initial public offering was an important milestone in the bank's restructuring plan.

"We believe Direct Line is on the path to a bright future," he said.

RBS, which is 82% owned by the UK taxpayer, is being forced to sell Direct Line by the end of 2014 under EU state aid rules after the government was forced to give it a £45bn bailout in 2008.