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Insurance industry hovering over Royal Bank of Scotland

After last week's announcement that the EU commission will look to force Royal Bank of Scotland to dispose of its insurance interests, namely Churchill, Direct Line and Green Flag, many in the insurance industry are now rubbing their hands with glee waiting for the bargain of a lifetime. Despite the fact that the three well-known brands in the UK will probably go for around £5 billion to £6 billion there are many who believe in the medium to longer term this will be a bargain.

The fact that Royal Bank of Scotland is also a "forced seller" will obviously impact upon any potential price although there will be significant interest and significant competition as and when the operations are put up for sale. The funds raised will be reinvested into the core business and used to shore up the balance sheet which has undergone a significant change since the recession began.

More and more we are seen UK banks forced to refocus on their core activities and this would appear to be a particular strategy which the UK regulators are keen to encourage. The fact is that UK financial companies have become far too strong in far too many sectors and this power needs to be reduced.

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