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Lloyds prices TSB float at below book value

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.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Ripe for a takeover Bet the Private Equity boys are licking their lips. The only Losers here are the original shareholders and the taxpayer

  2. @James

    What do you mean a takeover? The business is being spun off. As far as the taxpayer is concerned we’re pretty much cost neutral based on the bank levy receipts and the current market cap of the remaining holdings held by UKFI.

    If you’re suggesting that Gordon Brown shouldn’t have encouraged Lloyds to buy HBOS then I’m with you 100% but shareholders are owners and need to take care of their assets.

  3. Did the shareholders have the option or say whether to purchase HBOS. Although I did not have shares one of my clients did. He asked me should he sell. My advice at the time of take over Is that he should question the wisdom of why Lloyd should consider HBOS. If he could not come up with sensible answer he should sell( I once said personally I question the wisdom of the deal fell management are doing far better separate entity rather than merging with basketcase0

    As far as Brown is concerned I feel it was a done deal to save face.

    In respect of the takeover don’t forget that TSB is a clean bank and will offer greater scope for profit in the years ahead. Banking is changing as far as the retail customers concerned mostly will be done online. The Private Equity Boys will work with one of the new banks. All they have to do is invest in the technology .Politically, it will also make common sense to do it now with an election on the horizon.

    As one of my client has said he has made a lot of money on the back of banks since 2008 Banks are they are robbing B******* always will be We have (taxpayer) bailed them out. They will bring in new technology squeeze the value out of the property laws the top with the share options will walk away with a tidy pile.
    This client is by no means an aggressive investor, but he saw the value using Warren Buffett philosophy buying when others are fearful and will be selling where everybody gets back on the gravy train thinking banks are a great value.

  4. Chris Gardner 9th June 2014 at 5:54 pm

    @James Clancy | 9 June 2014 2:53 pm – we can all be smart in hindsight, but say what you like about Brown, he is globally recognised as having played a pivotal role in averting Armageddon. Had the govt not intervened shareholders would have lost everything, and all of us would be bartering with geese.

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