Bank agrees deal with Tesco over 50% shareholding; follows speculation that it will scrap bidding for RBSI.

RBS has announced that it has agreed to sell its 50% shareholding in Tesco Personal Finance (TPF) to Tesco, its joint venture partner, for £950m.

The sale is likely to increase speculation that RBS is looking to raise funds elsewhere after a number of potential suitors for its insurance division RBSI, including Zurich, pulled out of the bidding.

It follows reports that the bank could scrap the sale of its insurance division following Zurich's exit more than two weeks ago, ahead of this weeks reported deadline.

As part of the Tesco transaction, RBS said it will continue to provide certain commercial services to TPF post completion.

Sir Fred Goodwin, group chief executive said: "Over the last 10 years RBS and Tesco have built a strong and successful joint venture. At this stage of its maturity it is appropriate for TPF to move to single ownership for the next stage of its growth and we wish them well with their future plans"

The sale is subject to regulatory approvals and completion is expected to take place before the end of 2008.