Tesco Plc, Britain's biggest retailer, is near to reaching a €1.2 billion deal to buy out Royal Bank of Scotland's stake in their personal finance joint venture, sources familiar with the matter said.

Britain's second biggest bank put its insurance operations and other assets on the block in April to bolster its balance sheet and Tesco agreed to buy out its partner for Tesco Personal Finance, sources told Reuters at the start of June.

A deal is expected to be announced within days, the sources said, adding that it was likely to be worth between £900 million and one billion. Benny Higgins, a former high-profile retail banking executive at HBOS and RBS, has been lined up to run the business, one industry source said.

Both Tesco and RBS declined to comment.

Tesco Personal Finance celebrated its 10th anniversary last year. It made a profit of £128 million in its last financial year when it had 5.2 million customers for its range of products, including insurance, credit cards, loans, mortgages and savings.

Under the terms of the sale RBS could continue to provide banking services to Tesco Personal Finance during a handover period as the retailer seeks a banking licence from regulators.

RBS's insurance unit includes the Churchill and Direct Line brands and is Britain's second-largest general insurer. An auction of the business has run into trouble as a global credit crunch has left suitors reluctant to pay the £7 billion RBS wanted.

RBS is also expected to sell its insurance venture in Spain, where its partner for Linea Directa is Bankinter. Newspaper reports have said the Spanish bank had approached RBS about buying its stake in the 50-50 venture.