9th June 2014
Lloyds Banking Group has confirmed that in the upcoming TSB IPO shares will be sold at a price range between 220p and 290p writes Philip Scott.
Lloyds, which was bailed out by UK taxpayers in 2008, as part of its obligations to the European Commission is floating 25% of TSB, with retail investors being offered one free share for every 20 they snap up, up to a maximum value of £2,000 but they cannot sell the stock for at least a year. The reminder of TSB must be offloaded by the end of 2015.
How to build an efficient portfolio using ETFs: Click here to find out more about Mindful Money’s live webcast on Thursday, 12 June.
In a statement issued by Lloyds it said at the mid-point of the pricing range, TSB would be worth almost £1.3bn – less than its £1.6bn book value – when it joins the London stock market. It added that the final pricing of the stock is due to be confirmed around 24 June, with conditional dealings starting on the same day.
Following a near 20 year absence the TSB, or Trustee Savings Bank brand, once again hit UK high streets in September last year when Lloyds switched some 4.6m customers to the re-vamped brand as a result of being forced to offload hundreds of branches by the EC due to rules on state aid.
TSB has a customer base of 4.5m retail customers with 631 branches making it the seventh largest retail banking group in the UK by branch network.
The shares are being marketed as a growth opportunity, and an inaugural dividend is not expected to appear until 2017. Ed Salvesen, deputy head of equity research at Brewin Dolphin says: ‘Its balance sheet comprises primarily historically low-loss UK retail mortgages, funded by strong and stable customer deposits. It benefits from protection against legacy issues, including historical conduct-related claims and losses and historical employment and pension legacy issues as the bank was only set up in September.’
Register here for Neil Woodford updates and receive a free research report.