RBS confident on insurance sale

By Steve Slater

LONDON (Reuters) - Royal Bank of Scotland's performance and writedowns on risky assets remain in line with its previous guidance, but its results will be held back by the impact of the global credit crunch, it said on Wednesday.

It said it was confident of selling its insurance arm for the price it had in mind at the start of an auction, despite speculation tough markets have dampened interest.

But Britain's second-biggest bank, which raised 12 billion pounds in the biggest ever rights issue earlier this week, said it was adopting a cautious stance towards risk in the light of jittery markets, hurting its share price. The bank's focus on rebuilding capital is also likely to restrain profits, analysts said.

By 10:50 a.m. RBS shares were down 2.6 percent at 227.5 pence to be one of the weakest European bank stocks.

Other European banks were lifted by a media report that Russian billionaire Suleiman Kerimov has been buying shares in major Western banks.

"Everything seems to be as they said it would be, but the outlook statement is very cautious," said Mamoun Tazi, analyst at MF Global.

"Their appetite for risk has been tempered by the outlook on the economy and the markets, so if you try to interpret that, RBS could slam on the brakes and that could have negative implications on earnings growth," he said.

RBS Chief Executive Fred Goodwin said the bank is cautious on prospects, but it "remains very much open for business".