LONDON, Sept 20: State-backed Royal Bank of Scotland said on Friday it raised £630 million by selling a 20 per cent stake in Direct Line , the latest stage in an EU-ordered disposal of Britain’s biggest motor insurer.

RBS was ordered by European regulators to sell all of Direct Line — also one of Britain’s biggest home and general insurers — before the end of 2014, as a penalty for its 2008 taxpayer bailout which left it 81pc-owned by the government.

“This successful sale keeps RBS fully on track to meet its obligation to divest its stake in Direct Line by end-2014,” said RBS’s Finance Director Bruce Van Saun.

The sale was made at 210 pence a share, a 3.7pc discount to Direct Line’s closing price on Thursday and leaves RBS holding 427.4 million shares, a 28.5pc stake.

A banking source close to the transaction said it was “comfortably covered” and priced at the top of a 208 pence to 210 pence range with demand for the shares exceeding the amount being sold within an hour of the sale being announced.—Reuters