UPDATE 1-RBS to sell 630 mln pounds of insurer Direct Line's shares
* RBS to sell 20 percent stake in insurer
* Sale will cut RBS stake to under 30 pct
* RBS must sell all of Direct Line by end-2014 under state aid rules (Adds details, share price)
By Steve Slater
LONDON, Sept 19 (Reuters) - State-backed Royal Bank of Scotland is selling shares worth about 630 million pounds ($1 billion) in insurer Direct Line Group, putting it on course to shed all of its holding well before a regulatory deadline to do so.
RBS said late on Thursday it is selling 300 million Direct Line shares, including an over-allotment option set aside to meet strong demand, which in total represents 20 percent of the insurer.
It would leave RBS holding 427.4 million shares, or a 28.5 percent stake.
RBS has been ordered by European regulators to sell all of Direct Line - Britain's biggest motor insurer and one of the biggest home and general insurers - before the end of 2014, as a cost of taking a taxpayer bailout during the 2008 financial crisis.
It sold just over a third of its interest when it floated Direct Line last October and it cut its stake just below 50 percent with a share sale in March. At that time it agreed not to sell any more shares until early September. Continued...