Talks in Brussels between troubled banking group RBS and the EU have raised the prospect that the group's major motoring brands Direct Line, Churchill insurance and Green Flag will have to be sold off.The RBS insurance arm is Britain's largest car insurance provider, second largest general insurer and employs 18,000 people.
This week the European Commission has been ruling on measures banks must take to offset the advantage of state backing they have received, focussing mainly on forced asset sales.
Earlier, Northern Rock and Lloyds TSB were the subject of invasive EU competition rulings that ordered Northern Rock to be split in two and Lloyds TSB to dispose of significant parts of its high street network.
RBS was one of the worst affected by the credit crunch and was propped up by over £20bn of public backing.
Now 70%-owned by the taxpayer, RBS executives have been in Brussels this week thrashing out a settlement with EU competition chiefs.
According to Sky News, EU Competition Commissioner, Neelie Kroes, has said that the only way the EU will be satisfied with the extent of state backing for RBS will be if the bank sells off its insurance arm.
As well as Direct Line, Churchill and Green Flag, the group includes the Privilege brand and broker insurance provider NIG.
RBS mooted disposing of its insurance arm back in February, in order to raise sufficient money to avoid a government takeover.
But the sell off was abandoned after it became clear the amount raised would be billions of pounds less than RBS was hoping for.
At the time, RBS chief exec Stephen Hester said: "Given RBS's broader considerations, it was important to test the market for this business, which has demonstrated that a sale on terms currently available would destroy value for RBS shareholders."
Together, the group's thousands of employees and millions of customers in Britain are unlikely to welcome the new instability the EU is forcing on the companies.
Talks are set to continue after the weekend.
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