Lloyds Banking Group is to value TSB at around 15 per cent below book value ahead of its planned flotation of 25 per cent of the business.
The Financial Times reports shares will be priced between 220 and 290p. It says at the mid-price of the range, this would value TSB at £1.275bn, 15 per cent below the book value of more than £1.5bn but more than Lloyds would have received from the failed Co-operative Bank bid for the business.
The IPO will take place in July with pricing finalised on 20 June.
The bank is required to sell its holdings in TSB by December 2015 as part of conditions for receiving state aid during the financial crisis.
Shares will be offered to institutional investors and to intermediaries in the UK, the Channel Islands and the Isle of Man.
Lloyds Banking Group chief executive António Horta-Osório says: “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.
“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.”