Lloyds Planning Sale Of 11.5% Stake In TSB Offshoot

Updated on

The lock up period from that sale has now expired, and executives have been emboldened by the Scottish decision to remain part of the United Kingdom. Both Lloyds Banking Group PLC (ADR) (NYSE:LYG) (LON:LLOY) and TSB Banking Group PLC (LON:TSB) are domiciled in Scotland, and share prices suffered due to the uncertainty over independence.

On Thursday shares in TSB closed at 280p, which values the 57.5 million shares at £161 million. Lloyds Banking Group PLC (ADR) (NYSE:LYG) (LON:LLOY) will retain around 50% of issued share capital of TSB following the sale, and TSB will continue to be consolidated in its accounts.

Lloyds Banking shares are currently trading around 8% up on their June offering price. The previous sale was extended from a predicted 25% of its stake to 38.5% due to strong investor demand.

Gates Cap Management Reduces Risk After Rare Down Year

Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy Read More

Lloyds’ stake in TSB: A subject of great interest

The performance of TSB is being monitored with great interest by “challenger banks” such as Santander UK, Virgin Money, Aldermore and Shawbrook. Analysts predict that this latest sale will encourage them to press on with their own listing plans.

Another interested party is the UK government itself, which had planned to sell some of its remaining 25% stake in Lloyds later this year. The plan has been delayed whilst the bank waits on Bank of England permission to restart dividend payments, which is dependent on the outcome of regulator stress tests.

Continued divestment

Under the terms of its 2009 bailout, Lloyds Banking Group PLC (ADR) (NYSE:LYG) (LON:LLOY) must sell all of its shares in TSB Banking Group PLC (LON:TSB) by the end of 2015, a condition which aims to increase consumer choice in the UK banking sector. Lloyds has so far spent around £1.6 billion carving out the business, and reintroducing the TSB brand.

UBS Investment Bank is the sole bookrunner in connection with placing, and the two banks will agree on the price of placing shares at the end of the bookbuild process.

According to reports the proceeds of the sale will be used for general corporate purposes, and a lockup period of 90 days will be implemented upon completion of placing.

Subscribe to ValueWalk!

Get updates on the latest posts and more from ValueWalk straight to your inbox.