RBS Sees GBP200 Million Net Gain On Spain Insurance Stake Sale

Royal Bank of Scotland Group PLC (RBS) said Thursday that it expects to book a net gain of just over GBP200 million from the sale of a stake in a Spanish insurance venture.

The Edinburgh-based bank is selling its 50% stake in the motor-insurance company Linea Directa Aseguradora to joint-venture partner Bankinter SA (BKT.MC) for GBP426 million, resulting in the net gain.

The price represented a consideration of 2.5 times the tangible book value of the stake and a price to earnings ratio of 11.9 times 2008 earnings.

"The disposal of LDA is consistent with the strategy as announced on Feb. 26, 2009," RBS said.

In February, RBS launched a three- to five-year restructuring plan, under which GBP240 billion worth of assets have been placed in a non-core division with to prepare for run-off or disposal.

Thursday, RBS said the motor-insurer had operated largely independent of, and with limited connection to, the RBS group.

RBS this year canceled earlier plans to sell its insurance operations because they had been defined as profitable, offering diversity and strong returns.

RBS said it will continue its insurance businesses in the U.K., Germany and Italy.

At 1342 GMT, RBS shares were up 5.20 pence, or 14%, to 42 pence, as financial shares were sharply higher throughout the day.

Company Web site: www.rbs.com

-By Ragnhild Kjetland; Dow Jones Newswires; [phone]; [e-mail]