RBS provides more time on insurance bids

Listen to this article


Royal Bank of Scotland has extended the deadline for indicative bids for its insurance businesses amid concern about the level of competitive interest in the £7bn ($13.8bn) auction.

The deadline for indicative proposals to be submitted has been extended into next week, after two prospective bidders asked for more time to consider whether to bid, people familiar with the process said.

The development comes amid fears that Ping An, the Chinese insurer, will not be among those bidding for RBS’s insurance unit, which includes Direct Line and Churchill.

People with knowledge of the situation said a bid for RBS Insurance was not a priority for the Chinese insurer, and it was not expected to make an offer.

There are also doubts over whether Allianz, the German insurer, and American International Group of the US will table bids.

There were suggestions that Allianz was one of the prospective bidders seeking more time in which to make a decision.

RBS is working on the basis that Allianz will not bid, in spite of its having ambitions to expand in UK general insurance. AIG is also seen as unlikely to make an offer because it is grappling with its own issues, having been hit by the credit crisis.

Expectations of waning interest from Ping An come hard on the heels of a decision by Generali, the Italian insurer, to pull out of the race. Warren Buffett had already decided not to take his interest further.

RBS is relaxed about how the auction is proceeding, people familiar with the process said.

However, they emphasised that RBS would not sell the insurance businesses if it could not achieve what it viewed as a reasonable price for the assets.

Bankers acting for RBS sent sales memoranda to a select group of eight trade buyers last month. These also included Allstate, Zurich Financial Services and Travelers.

Private equity groups were shut out from bidding in the first round of the auction.

Bankers said some private equity buyers were attempting to get back in the process, and weak interest from trade buyers could force RBS to reconsider its decision to exclude them.

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.