Insurance Post

RBS mourns Direct Line Spain sale

Royal Bank of Scotland has pledged to grow its international businesses, after selling the Spanish u...

Royal Bank of Scotland has pledged to grow its international businesses, after selling the Spanish unit of Direct Line Insurance to Spanish bank Bankinter.

Bankinter is buying the remaining 50% of Linea Directa Aseguradora for EUR426m (£375m), after exercising a clause giving either bank the right to buy the other's share should a third party take control of either of them. That clause from the 1994 deal establishing Linea Directa came into effect in November, when the British government bought took control of RBS after investors shunned a rescue plan needed to save the bank after massive write-offs.

The deal sees Bankinter take control of policies on behalf of 1.6 million customers and leaves the Direct Line international arm with just over a million policyholders, split evenly between its German and Italian operations.

However, RBS Insurance said that as wholly owned subsidiaries, it has no intention to sell the German and Italian Direct Line businesses. It has also ruled out opening further international Direct Line offices.

An RBSI spokesman added: "Direct Line operations in Germany and Italy are both leading direct insurers within their markets and we look forward to their continued success. We were very sorry to see Linea Directa be sold but, under the terms of the joint venture, there was no choice."

In addition, RBSI confirmed that Spanish sale would have no affect on Charles Crawford's responsibilities, given that his overseas portfolio had been significantly reduced by the sale. Mr Crawford currently heads up partnerships, affinities and overseas operations at RBSI.

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