Lloyds likely to price TSB shares just below 260p


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The Independent Online

Lloyds is expected to price shares in TSB at just below 260p this morning as it mulls increasing the size of the stake it will sell to investors from the planned 25 per cent.

The bank narrowed the price range to between 250p and 270p yesterday from the original 220-290p.

With sources reporting “strong demand” from both retail and institutional investors, Lloyds could now sell as much as 35 per cent of the bank.

TSB would be worth around £1.3bn at the bottom end of the newly narrowed price range, with the company beginning its trading life at about 0.8 times the value of its in-force book of business.

That valuation is comparable to Barclays’ and puts TSB ahead of Royal Bank of Scotland.

The late surge in interest in TSB’s flotation is thought to have been driven in part by comments from the Bank of England’s Governor, Mark Carney, on the possibility of an early interest rate rise.

Britain moving to more normal rates from the current historic low of 0.5 per cent would make life easier for retail banks because they would be able to increase the spread between what they lend at to borrowers and what they pay out to depositers.

Lloyds was forced to sell TSB, which has more than 630 branches and just over 4 per cent of the current account market, to satisfy EU watchdogs in view of the state aid it received through its bailout during the financial crisis.