THE private-equity giants Apollo Management and BC Partners have teamed up with former Norwich Union boss Patrick Snowball to mount a late bid for the £7 billion insurance division of Royal Bank of Scotland (RBS).

Despite the new interest, RBS, which is more than half-owned by the taxpayer, may ditch the sale talks. As revealed by The Sunday Times, new chief executive Stephen Hester is keen to retain Churchill and Direct Line, which contribute the bulk of the insurance division’s pretax profits of almost £1 billion a year.

The Apollo-BC consortium is believed to be the frontrunner to buy the business, which includes the household names Churchill and Direct Line, after exclusive talks with CVC Partners and Swiss Re broke down.

Apollo and BC Partners, which manage more than £20 billion between them, have hired HSBC to advise on their bid.

Snowball has been looking at a number of opportunities since last summer when he stepped down from the board of Towergate, Europe’s biggest private insurer. He joined Towergate after being overlooked for the chief executive’s post at Aviva, Norwich Union’s parent.

Hester took charge of RBS in November after a £20 billion cash call that was underwritten by the government. Almost immediately, he launched a strategic review of the bank’s businesses.

Talks have begun with the Chinese authorities about a possible sale of RBS’s 4.3% stake in the Bank of China. Hester visited Beijing last week to discuss the subject with regulators.

The bank is expected to begin a share-placing exercise to dispose of the stake by the end of this month. Even if RBS is forced to accept a 20% discount to the current market price the stake would be worth about £2 billion – more than double the sum the bank invested three years ago.

Other sales of shares in Chinese banks have been priced at a discount of about 12% to market price. Bank of America sold its 2.5% stake in China Construction Bank last week, making a profit of about $1.1 billion (£720m).

Speculation is also mounting that the bank could earmark its Citizens business in America for disposal. Citizens is one of America’s top 10 retail banks, with a network of 1,600 branches. JP Morgan, Bank of America and Wells Fargo would all be interested in parts of the branch network.

However, a deal may require the American authorities to revoke an arcane law that prevents any bank from holding more than 10% of America’s bank deposits.

Separately, RBS has agreed a refinancing of LA Fitness, which will give the gym chain about £30m of fresh funds.

As part of the deal, LA’s main shareholder, Mid Ocean Partners, has injected fresh equity into the business, which is led by chief executive Martin Long.

LA plans to use the new five-year facility to finance a refurbishment of its estate.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive