Lloyds sells off 11.5% more of TSB stake after IPO success

Lloyds Banking Group has continued to sell off its stake in TSB with a further divestment of 11.5 per cent.

Lloyds Banking Group has been edging closer and closer to washing its hands of challenger bank TSB for months. Today (26 September) it has emerged it has raised another £161 million from selling off a further 11.5 per cent stake in the promising lender.

It’s clear that Lloyds has wasted no time in bringing the latest sale to market, having promised it would not sell any more shares until this week.

After selling 38.5 per cent of the challenger in a positively received initial public offering in June, the bank says it is left with around half of TSB.

As a result, it will keep consolidating TSB in its accounts.

For investors, it would have been very difficult to invest in either bank just over a week ago, as uncertainty regarding the outcome of the Scottish independence referendum left many unwilling to take the plunge and acquire a stake.

Both Lloyds and TSB are registered in Scotland, and Lloyds had said it might have to relocate to England in the event of a Yes vote. In the end, businesses were relieved to find that the decision to remain within the UK offered greater certainty, and the pound and several key stocks rallied on Friday morning.

EU rules stipulate that Lloyds has to divest itself of the whole of TSB by the end of next year, as one of the conditions of the government bailout Lloyds received in 2009.

It’s on track to achieve that goal, and Lloyds is probably relieved that it will continue to get better prices on TSB shares than it might have done in the aftermath of a Yes vote.

The government still owns a 25 per cent stake in Lloyds, and is likely to feel exactly the same way as the bank about its prospects for future share sales. Whitehall had planned to sell another chunk of the bank to retail investors this year, but that was put on ice and it is unclear how soon Lloyds could cease to be partially state-owned.

It’s interesting that other challenger banks have also been making moves towards flotation. Whether the likes of Aldermore go through with their plans or not, it is likely they are looking at TSB’s fortunes as their example.

< Top image: Which4U>