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Royal Bank of Scotland Group plc Raises £650m From Direct Line Insurance Group plc Shares

Shares in Royal Bank of Scotland (LSE: RBS) (NYSE: RBS.US) dropped marginally in early trade, after yesterday announcing that it is set to sell a 18.2% stake in Direct Line (LSE: DLG), whose own shares fell by 2.5%.

With an additional 1.8% available,  that figure could rise to 20% if demand is high — which, based on yesterday’s closing price of 218p, would raise around £650m for the bank.

Analysts believe that the timing is due to profit-taking as the shares are up over 20% since the initial public offering in October 2012, as well as taking advantage of the market’s positive sentiment and recent bull run.

RBS has been ordered to sell all of its stake in Direct Line by 2015 by regulators after the government bailout in the midst of the credit crunch, and today’s plan is set to leave it with a holding of just under 30% in the insurer.

Of course, whether the present valuation makes either company a ‘buy’ for you remains something only you can decide.

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> Sam does not own shares in any of the companies mentioned.