Paper reports Direct Line and Churchill to stay with bank

Royal Bank of Scotland (RBS) may cancel the sale of Direct Line and Churchill, according to the Sunday Times yesterday.

It said RBS would decide within the next eight weeks whether to press ahead with a £7bn sale of its insurance unit. IT claimed RBS had already rejected an offer from private equity firm CVC Capital Partners.

Reuters reported that RBS had denied the story saying: "We are continuing discussions with a number of interested parties."

RBS could not confirm or deny the story to Insurance Times this morning.

The Sunday Times said new chief executive Stephen Hester is keen to retain Churchill and Direct Line, which contribute the lion's share of divisional pre-tax profits of about £1bn a year.

Quoting “one banking source familiar with the Edinburgh-based group's plans” the Sunday Times reported: “These are hugely profitable businesses. RBS no longer needs to sell them.”

The paper also said that Mervyn Davies, the chairman of Standard Chartered, and Sir Keith Whitson, the former chief executive of HSBC, have been approached to take on the RBS chairmanship.