Allen & Overy (A&O) and Slaughter and May have led on a deal that has seen the Royal Bank of Scotland (RBS) give up control of UK insurer Direct Line with a £507m share sale.

RBS, which sold a 34.72% share in Direct Line when it listed on the London Stock Exchange last year, has now sold a further 15.3%, reducing its stake in the insurer to just below 50%.

A&O City corporate partner David Broadley advised RBS on the sale, while Slaughters corporate partner Andy Ryde provided counsel to Direct Line. Linklaters corporate partner Dan Schuster-Woldan and managing associate James Wootton represented the banks.

RBS, which remains majority owned by the UK Government after its 2008 bailout, is committed to a series of measures imposed by the European Commission as a condition of receiving state aid. These include disposal of its interest in Direct Line by the end of 2014, with a requirement that more than 50% of its shares are sold by the end of this year.

Last September both A&O and Slaughters advised on Direct Line's London listing, which valued the insurance company at an estimated £3bn.

A&O acted for Direct Line and RBS with a team led by Broadley, who worked alongside insurance partner Philip Jarvis and incentives partner Sylvie Watts. Slaughters worked with A&O to advise Direct Line on its flotation and separation from RBS, with corporate partner Jeff Twentyman heading up the firm's team.

Linklaters represented Goldman Sachs and Morgan Stanley as the joint global co-ordinators, sponsors and bookrunners on the offering, with UBS also appointed as a joint bookrunner.