RBS 'is keeping Churchill'

Published on Sunday 11 October 2009 20:12

SOURCES close to Royal Bank of Scotland last night poured cold water on reports that it is considering a public listing of car insurance business Churchill.

A Sunday newspaper claimed RBS's advisers, Morgan Stanley and Hoare Govett, had proposed resurrecting a previous plan to sell the insurance asset.

It was suggested that the move would help RBS raise billions of pounds as it seeks to reduce its dependence on the taxpayer, and it may go some way in appeasing European Competition Commissioner Neelie Kroes, who is expected to deliver a ruling on RBS and Lloyds Banking Group before the end of the month.

But sources close to RBS last night said Churchill and its other insurance brands were identified earlier this year by RBS chief executive Stephen Hester as "core assets" and a sell-off was unlikely.

Meanwhile, there is mounting expectation that Lloyds will launch a multi-billion-pound rights issue in the next two weeks. Lloyds is understood to have lined up UBS, Bank of America and Merrill Lynch to underwrite a fundraising of as much as 11bn. Citigroup, Goldman Sachs, JP Morgan Cazenove and HSBC are understood to have agreed to act as joint underwriters.

Lloyds has been told it will have to raise 25bn if it wants to avoid participating in the UK government's Asset Protection Scheme.