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Lloyds Bank has sold a further 11.5 per cent stake in TSB in a share placing to investors for its initial spin off and float in June.
Lloyds Banking Group sold another slice of TSB today, paving the way for Chancellor George Osborne to look at selling more of the taxpayers’ stake in the banking giant ahead of the general election.
A surge in demand after its initial placing has led Lloyds to bring more TSB shares to market as it aims to sell off the lender ahead of next year's regulatory deadline.
Lloyds shares rose 0.6 per cent to 76.66p while TSB shares, which were placed at no discount to last night’s closing price of 280p, fell 0.2 per cent to 279.5p.
Lloyds said it would sell 57.5 million shares at 280p, raising £161 million. The sale leaves it with a 50 per cent stake in TSB, which it was ordered to sell by European regulators.
The sale of 57.5 million shares overnight, largely to blue-chip institutional shareholders, was handled by UBS. It saw Lloyds stake in TSB cut to 50 per cent. Under European orders for state aid to the bank after its £20 billion bailout, Lloyds must sell all of TSB by the end of next year.
Sources familiar with the matter said demand for the shares outstripped the number available several times over enabling Lloyds to sell the shares to mainly long-term investors, Reuters reported.
Osborne has ruled out a public offer for any of the taxpayers’ remaining stake ahead of the election but could still opt for a further institutional sale.
The sale attracted interest from investors in the US as well as Europe and buyers had been found to cover the sale within an hour of it being launched after the market closed on Thursday.
So far UKFI, the body that holds the taxpayers’ shares, has sold two tranches of Lloyds shares — £3.2 billion worth in September 2013 at 75p a share and £4.2 billion worth in March at 75.5p a share.
Investors were attracted by an exposure to the UK’s economic recovery via a bank which is untainted by issues of past misconduct. They see TSB as a viable challenger to Britain's 'big 4' banks - Lloyds, Royal Bank of Scotland, Barclays and HSBC.
Hopes of a full public sale this autumn were largely scuppered by worries over Scotland’s independence referendum. The taxpayer paid an average 73.6p a share in Lloyds various bailouts.
Lloyds sold a 38.5 per cent stake in TSB in June at 260 pence per share through an initial public offering, which valued Britain's seventh-largest bank at £1.3 billion.
European regulators forced Lloyds to sell the 631 branches which now form TSB as a condition for getting a £20.5 billion government rescue during the financial crisis.
TSB is one of a number of British banks that have either recently listed on the stock exchange or are preparing to do so, tapping investor appetite for newcomers aiming to challenge the established banks.
Aldermore said on Monday that it planned to list in London next month, in a debut that could value it at up to 900 million pounds. Virgin Money, backed by entrepreneur Richard Branson, is expected to list later this year.
Lloyds faces a deadline to sell its entire stake in TSB by the end of 2015 and it is expected to sell its remaining shares in two stages. The bank has said it will sell no shares in the bank for 90 days following the latest placing.
