Bankinter seeks to buy RBS out of Spanish JV-paper

LONDON, May 4 (Reuters) - Spain's Bankinter (BKT.MC: Quote, Profile, Research) has approached Royal Bank of Scotland (RBS.L: Quote, Profile, Research) about buying its stake in the Linea Directa 50-50 joint venture, the Sunday Times said. The newspaper, without citing sources, said the approach by Bankinter valued the Spanish motor insurance venture at up to 700 million pounds ($1.4 billion).

Bankinter and RBS declined to comment.

RBS, Britain's second biggest bank, said last month it would sell assets to generate 4 billion pounds in core capital this year, mostly from the possible disposal of all or a stake in its insurance arm, which includes brands Direct Line and Churchill.

This announcement came alongside a record 12-billion-pound cash call to shareholders to cover increased writedowns on the value of toxic assets and to help repair one of the sector's most stretched balance sheet.

Separately, RBS said it was ending free banking for businesses.

A spokeswoman, confirming a report in the Observer newspaper, said the move would affect a very small proportion of its 1 million business customers, most of which already pay fees on their accounts. (Reporting by Mark Potter; Additional reporting by Justin Webb in Madrid. Editing by Richard Hubbard)