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| TSB shares jump on trading debut and lift prospects for future Lloyds sell-off | TSB shares jump on trading debut and lift prospects for future Lloyds sell-off |
| (about 2 hours later) | |
| Shares in TSB, the offshoot of Lloyds Banking Group, jumped on their debut on Friday after the state-owned bank priced the 631 branches at £1.3bn. | Shares in TSB, the offshoot of Lloyds Banking Group, jumped on their debut on Friday after the state-owned bank priced the 631 branches at £1.3bn. |
| The TSB shares were priced by Lloyds at 260p each but they surged to 300p before closing at 290p in the first opportunity for City investors to trade. | The TSB shares were priced by Lloyds at 260p each but they surged to 300p before closing at 290p in the first opportunity for City investors to trade. |
| The TSB branches have to be spun off because of the requirements imposed on Lloyds by the EU 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 delayed the process. | The TSB branches have to be spun off because of the requirements imposed on Lloyds by the EU 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 delayed the process. |
| Lloyds floated a larger-than-expected tranche of shares – 35% rather than 25% of its holding – on the stock market in what will be the first of many sell-offs as it prepares to meet the EU demand to dispose of the TSB unit entirely. The 60,000 retail investors who bought in during the flotation process will be able to trade for the first time next week. | Lloyds floated a larger-than-expected tranche of shares – 35% rather than 25% of its holding – on the stock market in what will be the first of many sell-offs as it prepares to meet the EU demand to dispose of the TSB unit entirely. The 60,000 retail investors who bought in during the flotation process will be able to trade for the first time next week. |
| The shares were priced "to go" as Lloyds' internal valuation of TSB is £1.6bn. For Lloyds, though, the sell-off is further evidence of a return to normality with expectations that the government can part with the rest of its 24% stake in the group – down from 43% – before the May 2015 general election. | The shares were priced "to go" as Lloyds' internal valuation of TSB is £1.6bn. For Lloyds, though, the sell-off is further evidence of a return to normality with expectations that the government can part with the rest of its 24% stake in the group – down from 43% – before the May 2015 general election. |
| There were suggestions that Lloyds would 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 Lloyds would 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. |
| Paul Pester, the boss of TSB, said retail investors made up 30% of buyers, whose appetite for bank shares is being tested before a promised 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. | Paul Pester, the boss of TSB, said retail investors made up 30% of buyers, whose appetite for bank shares is being tested before a promised 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 shares market dominance with Royal Bank of Scotland, HSBC and Barclays. The current account market is the one which has traditionally been hardest to wrest from the "big four". TSB is offering an account with a 5% rate of interest while players such as Tesco Bank are also entering the current account market for the first time. | The government will see the steps towards a standalone TSB as a way to improve competition on the high street – where Lloyds shares market dominance with Royal Bank of Scotland, HSBC and Barclays. The current account market is the one which has traditionally been hardest to wrest from the "big four". TSB is offering an account with a 5% rate of interest while players such as Tesco Bank are also entering the current account market for the first time. |
| TSB is valued at around £1.6bn by Lloyds which has spent a similar amount creating the network. | TSB is valued at around £1.6bn by Lloyds which has spent a similar amount creating the network. |
| Paul Simmonds, from Warwick Business School, said: "The government is keen to have more competition in high street banking but is there enough room for all the new banks?" | Paul Simmonds, from Warwick Business School, said: "The government is keen to have more competition in high street banking but is there enough room for all the new banks?" |
| Lloyds said the offer for TSB shares had been 10 times oversubscribed. Stockbroker 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 at Hargreaves Lansdown. |