Royal Bank of Scotland (RBS), which is 60 per cent-owned by the British taxpayer, reaped an estimated £800 million profit yesterday from the sale of its stake in the Bank of China (BoC).

RBS sold its 4.3 per cent in BoC for about £1.7 billion, having bought it in August 2005 for £900 million.

The gain will be offset in part by taxes and by the impact of hedges put in place against a decline in the Chinese bank’s share price.

The move makes the sale of RBS’s insurance business, which includes Direct Line and Churchill, less urgent.

Final bids are due in next week, but these are expected to be less than the £4 billion to £5 billion that RBS wants.

Moreover, the share sale has reduced the need for the Scottish bank to raise money from other sources. It is understood that RBS has not ruled out a sale, if the price is high enough.

A private equity consortium, comprising BC Partners and Apollo, is working on a bid with Patrick Snowball, the former operations head of Aviva, and is due to submit a final offer next week.

However, it is thought that it is interested only in buying a 51 per cent stake.

CVC Capital Partners, another private equity firm, is the only other potential bidder.

It remains on the sidelines after failing to reach an agreement with RBS in earlier talks.

RBS is expected to announce a final decision on a sale in the next few weeks.

Stephen Hester, who took over as RBS’s chief executive after a £20 billion cash call that was underwritten by the Government, is thought to be keen to keep the insurance business, which is profitable.

The BoC share sale is the first result of a strategic review launched in November by Mr Hester, RBS may also sell its Citizens banking business in the United States.

The Government owns £5 billion of preference shares and £15 billion of ordinary stock and it is understood that Mr Hester wants to repay this as soon as possible.

Mr Hester, the former head of British Land, replaced Sir Fred Goodwin, who stepped down after the group’s shock capital-raising.

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