Sunday Telegraph: Lloyds To Sell Up To 50% Stake In TSB At IPO

(RTTNews) - British lender Lloyds Banking Group plc (LYG, LLOY.L) will initially sell a stake of between 30 percent and 50 percent in its TSB business at the time of the unit's initial public offering in the first half of 2014, the Sunday Telegraph reported. The company is likely to further reduce its stake in TSB over time.

According to the Sunday Telegraph report, TSB will float on the London Stock Exchange with a valuation in the region of 1.5 billion to 2 billion British pounds. Lloyds will also reportedly offer shares in TSB to retail investors through a small number of stock brokers. TSB was launched as a standalone brand in September 2013.

Lloyds is required by the European Commission or EC to sell the 631 branches that it rebranded as TSB as a condition that was fixed for receiving a government bailout of 20 billion pounds during the 2008 financial crisis. The EC initially set Lloyds a deadline of November 2013 for the separation of TSB. However, that deadline was missed after Co-op Bank pulled out of a deal in April to buy TSB.

In late September, the Sunday Telegraph reported that Lloyds received several approaches from private equity firms, including U.S.-based JC Flowers, that were interested in buying its TSB Business. Lloyds reportedly hired Citigroup and JP Morgan to advise on TSB.

UK Financial Investments Ltd. or UKFI, which manages the British government's stake in Lloyds as well as Royal Bank of Scotland Group Plc (RBS, RBS.L), said in September that it plans to sell a 6 percent stake in Lloyds through a placing to institutional investors. The stake sale will reduce the government's stake in Lloyds to 32.7 percent from the 38.7 percent that it currently holds.

The British government is selling part of the stake that it has been holding in Lloyds since it bailed out the banking group following the bank's troubled takeover of HBOS during the 2008 financial crisis. Lloyds has been grappling with tough times after its merger with HBOS.

LLOY.L closed Friday's trading on the London Stock Exchange at 74.62 pence, down 0.84 pence or 1.11 percent on a volume of 110.03 million shares.