RBS has been ordered to sell the insurance arm as part of the fallout of the financial crisis, which saw the government take an 83 per cent stake in the bank.
Yesterday RBS announced it had appointed the advisers to decide whether the division will be floated or offloaded in a trade sale.
A float had looked the most likely bet but it is now thought a trade sale would be the safest option, given the volatile IPO market.
Warren Buffett’s Berkshire Hathaway and US group Allstate have been earmarked as potential suitors in a trade sale.
Sources close to the bank told City A.M. a decision will be made in the latter half of 2012. Until that time a “dual track approach” will be taken to assess which of the options will most benefit the bank.
A final sale of the unit, which recently swung to a £253m loss, must be completed before 2014. RBS declined to comment last night.
The bank has already sold 318 of its branches to Santander. Lloyds Banking Group is due to sell 600 branches under the same ruling.