LONDON â€" The Royal Bank of Scotland stands to collect £787 million ($1.3 billion) through the initial public offering of its insurance unit Direct Line, which started trading on Thursday.
The share sale is part of a mandate from the European Union, which required British bank to offload the business as a condition of receiving a government bailout during the financial crisis.
Royal Bank of Scotland, which is still 81 percent owned by the British government, must sell its remaining stake in the business by 2014.
The Edinburgh-based bank said it had sold a 30 percent stake in Direct Line at 175 pence per share. Stock in the British insurance business, which started trading on a conditional basis, had risen 5.9 percent on Thursday.
The I.P.O is one of the largest so far this year in Europe and values the company at £2.6 billion. To access a larger pool of investors, retail shareholders were offered a roughly 15 percent allocation of Direc t Line's shares that were sold on Thursday.
The ongoing European debt crisis has made it difficult for companies to raise money through I.P.O.'s. Earlier this year, the Dutch cable operator Ziggo and the Swiss logistics company DKSH raised a combined $2 billion.
Since then, several companies, including the German chemicals company Evonik, have postponed their European listings because of the uncertainty economic climate.
Last month, Direct Line announced plans to cut almost 900 jobs from its 15,000 workforce as it looked to reduce costs. The insurer said the layoffs were part of a £100 million annual cost-cutting plan for the next two years.
Morgan Stanley, Goldman Sachs and UBS are working on the I.P.O.
