This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.theguardian.com/business/2014/jun/20/lloyds-tsb-branches-valuation-share-sale

The article has changed 5 times. There is an RSS feed of changes available.

Version 0 Version 1
TSB float values bank at £1.3bn as Lloyds sells 35% off TSB float values bank at £1.3bn as Lloyds sells 35% off
(about 2 hours later)
Lloyds Banking Group has priced its high street banking offshoot TSB at £1.3bn – less than its own value for the network of 631 branches.Lloyds Banking Group has priced its high street banking offshoot TSB at £1.3bn – less than its own value for the network of 631 branches.
Even so, António Horta-Osório, chief executive of the 24% taxpayer owned bank, described the sale of the shares to City investors and 60,000 retail investors as successful. Even so, António Horta-Osório, chief executive of the 24% taxpayer owned bank, described the sale of the shares to City investors and 60,000 retail investors as successful .
The shares were priced at 260p and a larger than expected tranche of shares – some 35% rather than 25% of Lloyds' holding – will be floated on the stock market in what will be the first of many sell-offs of the shares. On Friday the bank's shares had surged to 290p in conditional trading. The shares were priced at 260p but in the first opportunity for City investors to trade the shares they had surged to 290p, pushing the valuation of TSB up to just over £1.4bn.
A larger-than-expected tranche of shares – some 35% rather than 25% of Lloyds' holding – is being floated on the stock market in what will be the first of as many as three other sell-offs of the shares. The retail investors who bought in during the flotation process will be able to trade for the first time next week.
The TSB branches had to be spun off because of the requirements imposed on Lloyds at the time of its £20bn taxpayer bailout in 2008. They were supposed to have been sold by now but the botched attempt to sell them to the Co-operative Bank to create a 1,000 strong branch network delayed the process.The TSB branches had to be spun off because of the requirements imposed on Lloyds at the time of its £20bn taxpayer bailout in 2008. They were supposed to have been sold by now but the botched attempt to sell them to the Co-operative Bank to create a 1,000 strong branch network delayed the process.
Following the collapse of that deal shortly before a £1.5bn capital shortfall was uncovered at the Co-op bank, Lloyds created the TSB network on the high street. Even after the sale, Lloyds and TSB will remain linked though 10 years over IT systems.Following the collapse of that deal shortly before a £1.5bn capital shortfall was uncovered at the Co-op bank, Lloyds created the TSB network on the high street. Even after the sale, Lloyds and TSB will remain linked though 10 years over IT systems.
For Lloyds, though, the sell off is further evidence that it can return to the private sector after the government has already reduced its stake from 43%. Another sale of Lloyds shares is expected before the May 2015 general election. For Lloyds, though, the sell off is further evidence that it can return to the private sector after the government has already reduced its stake from 43%. Another sale of Lloyds shares - including to the public - is expected before the May 2015 general election.
"The successful initial public offering of TSB is an important further step for Lloyds Banking Group as we act to meet our commitments to the European commission. The significant investor demand for shares in TSB, which reflects investors' confidence in the prospects for the business, has meant that we have been able to set the offer size at 35%," said Horta-Osorio. There were suggestions that Lloyds could sell off a larger than expected tranche of shares because of Mark Carney's warning that interest rates could rise earlier than expected. The remarks by the Bank of England governor are regarded as helpful for TSB as it could be more profitable in the future if rates rise off their 0.5% historic lows.
There were suggestions that a larger than expected tranche of shares could be sold because of Mark Carney's warning that interest rates could rise earlier than expected. The remarks by the Bank of England governor are regarded as helpful for TSB as it could be more profitable in the future if rates rise off their 0.5% historic lows. "The successful initial public offering of TSB is an important further step for Lloyds Banking Group as we act to meet our commitments to the European commission. The significant investor demand for shares in TSB, which reflects investors' confidence in the prospects for the business, has meant that we have been able to set the offer size at 35%," said Horta-Osório.
Paul Pester, the boss of TSB, pointed out that retail investors made up 30% of the buyers, whose appetite for bank shares is being tested ahead of sell-off of Lloyds to the public.
"It shows there is real appetite for a different kind of bank – a high street bank, not a Wall Street bank – which is focused on customer service," Pester said.
The government will see the steps towards a standalone TSB as a way to improve competition on the high street – where Lloyds along with Royal Bank of Scotland, HSBC and Barclays are the dominant players. While the new network of branches will not be as large as if the Co-op deal had been complete, the TSB network is being set up as other players step up their offerings of current accounts, including Tesco Bank.The government will see the steps towards a standalone TSB as a way to improve competition on the high street – where Lloyds along with Royal Bank of Scotland, HSBC and Barclays are the dominant players. While the new network of branches will not be as large as if the Co-op deal had been complete, the TSB network is being set up as other players step up their offerings of current accounts, including Tesco Bank.
The current account market is the one which has traditionally been hardest to wrest from the "big four" and TSB is offering an account with 5% rate of interest. TSB is valued at around £1.6bn by Lloyds which has spent a similar amount creating the network.The current account market is the one which has traditionally been hardest to wrest from the "big four" and TSB is offering an account with 5% rate of interest. TSB is valued at around £1.6bn by Lloyds which has spent a similar amount creating the network.
RBS also has to sell off branches under the terms of its £45bn bailout but is also behind schedule and yet to hang Williams and Glyn signs over 315 branches it is selling.RBS also has to sell off branches under the terms of its £45bn bailout but is also behind schedule and yet to hang Williams and Glyn signs over 315 branches it is selling.
Lloyds said the offer for TSB shares had been 10 times overscribed. Stock broker Hargreaves Lansdown said Lloyds had scaled back applications from retail investors. "Investors applying for up to £2,000 of shares received their full amount, rounded down to the nearest whole share (769 shares corresponding to £1,999.40). Applications for more than £2,000 of shares will receive 769 shares plus 30% of the excess amount, rounded down to the nearest whole share," said Richard Hunter, head of equities, Hargreaves Lansdown.