On Wednesday the Italian firm Generali said that it would not be bidding for the insurance arm of Royal Bank of Scotland. The news came just a few hours before the first bid deadline for the asset.

Warren Buffett's Berkshire Hathaway also pulled out of the bidding in recent weeks. The latest withdrawal could well raise questions about the price and the conditions of sale of the insurance arm.

Royal Bank of Scotland put its insurance arm up for sale in April and is hoping to raise £6.0-7.5 billion in order to rebuild its capital base. Last month the bank also held a rights issue with the aim of raising £12 billion.

Other potential bidders for the insurance arm include Zurich Financial Services, Allianz, Allstate, Travelers, AIG and Ping An, reports Reuters. Zurich Financial Services is seen as the frontrunner.