RBS and Aviva to form new venture

RBS will book a £235m loss as a result of changes to the agreement

Royal Bank of Scotland has announced plans to enter into a new distribution partnership with insurer Aviva.

The parties expect to end their existing profit-sharing joint venture, in which Aviva's insurance products are sold via the bank, at the end of 2010.

RBS announced it would book a one-off loss of £235m as a result of the changes to their existing agreement.

Under the new arrangement, Aviva will create products while RBS will receive all profits from their distribution.

RBS will also design and distribute its own investment products.

The two parties said they expected to complete discussions in the second half of this year with a view to terminating the existing joint venture from 31 December 2010.

The bank said the new agreement would "position RBS to compete more effectively and to respond to developments in the bancassurance market".