Lloyds to begin floating TSB bank on London Stock Exchange

Lloyds Banking Group expects to float about 25 per cent of its TSB bank on the London Stock Exchange next month, with the remainder to be sold before the end of next year, the bank said.

Banking industry sources said last week they expected TSB to be priced at less than its book value of £1.5 billion (HK$19.6 billion), meaning Lloyds would see a loss on the sale of the 200-year-old brand.

Lloyds is required to sell the 631 branches making up TSB because of an EU requirement that it creates more competition in the British market after receiving state aid in the financial crisis.

"TSB has a national network of branches, a strong balance sheet and significant economic protection against legacy issues," Lloyds' chief executive Antonio Horta-Osorio said in a statement.

The offer is expected to take place next month, with the publication of a prospectus in mid-June.

Industry sources said last week the pricing of the TSB offer was expected to be at the bottom end of guidance on how much the bank would sell for, reflecting a cooling of investor interest in British company flotations after a flurry of activity earlier this year.