The European Commission has signed off on plans for TSB to float.
In a statement yesterday, EC competition policy vice president Joaquin Almunia said: “Establishing TSB as a standalone market player will increase competition in the UK market for retail banking services.”
Lloyds Banking Group had been set a deadline of November 2013 to sell the TSB business as a condition of receiving state aid during the financial crisis
The Co-operative Bank had been lined up as a buyer but pulled-out in April 2013 as it revealed a £1.5bn capital shortfall.
It paves the way for Lloyds to begin a planned flotation over the summer.