State-rescued Royal Bank of Scotland on Friday said it would float its insurance subsidiary Direct Line Group on the London stock market ahead of a full sale of the unit by the end of 2014.
News of the initial public offering (IPO) follows an announcement by RBS earlier this month to cut almost 900 jobs at Direct Line.
"We are pleased to confirm today our intention to commence an IPO of Direct Line Group," the bank's finance director Bruce Van Saun said in a statement issued by RBS.
"We believe it has a strong future as a standalone insurance group continuing to serve its customers well while delivering attractive returns to investors."
RBS was ordered to sell Direct Line -- a British leader in the fields of motor and home insurance -- after the bank received massive amounts of state aid in the wake of the 2008 financial crisis.
"In 2009, as a condition to its receipt of state aid, RBS committed to the European Commission to undertake a series of measures, which include disposing of its interest in Direct Line Group.
"To comply with this requirement, the RBS must cede control of Direct Line Group by the end of 2013 and must have divested its entire interest by the end of 2014," the Edinburgh-based bank added in the statement.
RBS is 82-percent owned by the British government following a bailout that totalled £45.5 billion ($73.68 billion; 56.57 billion euros).
Shares in RBS surged 4.48 percent to stand at 286.16 pence in early London trading on Friday, while dealers said the large gain followed an announcement overnight by the Federal Reserve for a fresh push to stimulate the US economy.
London's benchmark FTSE 100 index, on which RBS is traded, was up 1.32 percent at 5,896.45 points.