RBS to launch Direct Line IPO

Royal Bank of Scotland is to launch an initial public offering (IPO) of its Direct Line Insurance Group, completing one of the conditions of its 45.5bn-pound bailout from the government in late 2008.

"We are pleased to confirm today our intention to commence an IPO of Direct Line Group. Direct Line was launched more than 25 years ago as a pioneer of direct motor insurance and it has grown to become the market leader in UK personal lines insurance," said RBS's Finance Director Bruce Van Saun.

"We believe it has a strong future as a standalone insurance group continuing to serve its customers well while delivering attractive returns to investors," he said.

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RBS, which is 82% owned by the government, agreed to the European Commission to undertake a series of measures following its state aid, including the disposal of its interest in Direct Line.

To comply with this, RBS must cede control of the unit by the end of next year and must have offloaded its entire interest by the end of 2014.

It was reported last week that Direct Line is to cut 900 jobs in a bid to save costs, with more than half of the positions to go at its site in Stockton-on-Tees which will be closed.

Direct Line has launched a series of initiatives aimed at saving £100m by the end of 2014.