Lloyds Bank confirms TSB IPO float on London Stock Exchange

Lloyds Banking Group has confirmed that it will be selling off a 25 per cent stake in TSB next month.

The London Stock Exchange has seen a flurry of flotations recently, but the latest company to have announced its intention to list is set to be one of the most closely watched this year.

To comply with the divestment that was mandated by the European Union, Lloyds Banking Group has confirmed that it is planning to sell the first round of shares in TSB next month.

Some 25 per cent of Lloyds’ existing ordinary shares will be sold off in an initial public offering (IPO) on the London Stock Exchange. It marks the first step in a process that will end on or before 31 December 2015, by when Lloyds must have sold its entire remaining stake in TSB to comply with the EU mandate.

A deal had originally planned to sell TSB to The Co-operative Bank, but it collapsed after news emerged that the institution could not afford to pay since it had discovered a £1.5 billion hole in its finances.

“The decision to proceed with an initial public offering of TSB is an important further step for the Group as we act to meet our commitments to the European Commission,” says António Horta-Osório, chief executive of Lloyds Banking Group.

“TSB has a national network of branches, a strong balance sheet and significant economic protection against legacy issues. It is already operating on the UK high street and is proving to be a strong and effective challenger, further enhancing competition in the UK banking sector.”

It will become another challenger bank among the likes of Metro Bank and Virgin Money, but benefit from a lengthy heritage, brand recognition and a low-risk balance sheet, the company says.

As a result it says TSB will have huge growth potential that should attract a range of investors – including the public, who will be able to purchase shares.

A network of over 600 branches and four contact centres, along with 4.5 million customers, could well make TSB an attractive proposition. The Financial Times reports that Lloyds should secure a valuation close to the book value of £1.5 billion – twice what it could have gained from the Co-op deal. Whether the recent slackening of appetite for IPOs will take its toll, however, remains a concern.

Top image: Which4U