Bailed-out British lender Royal Bank of Scotland is in line for a 1 billion pound ($1.56 billion) windfall dividend from RBSI before the planned flotation of the insurance unit in the second half of next year. RBSI plans to pay its parent a dividend of between 500 million pounds and 1 billion pounds before the initial public offering, funded in part by hybrid debt issuance, its finance director John Reizenstein said on Friday in a presentation to analysts.
RBSI, which trades under the Direct Line and Churchill brands and ranks as Britain's biggest motor insurer, is being sold to appease European regulators after a taxpayer-funded bailout of RBS during the 2008 crisis that left it 83 percent state-owned. RBS head of investor relations Richard O'Connor told analysts the bank had "fallback options" if equity markets do not recover from a slump triggered by the eurozone debt crisis in time for the IPO, but declined to say what they were.