Lloyds Banking Group has sold off a further 11.5% TSB stake in a share placing to investors, the London-based bank announced on Friday. Due to strong demand, the placing did not require any discount to the market price.
Lloyds, which now owns just 50% of TSB, had announced the further sale of 57.7 million shares priced at 280 pence each. The sale raised ₤161 million ($262.6 million).
European regulators ordered Lloyds to sell off its stake in TSB Banking Group plc, because the British taxpayer had purchased 43.4% of Lloyds in 2009, which EU regulators counted as state aid.
According to people familiar with the sale, TSB shares were eleven times oversubscribed, with investors from all over the world.
TSB is particularly attractive to investors because it has a clean slate – it is not tainted by past misconduct.
TSB is set to become a major UK high street bank.
TSB, a promising ‘challenger bank’
TSB is a ‘challenger bank’, i.e. it is likely to become a serious rival to the UK’s five main high street banks – Royal Bank of Scotland, HSBC, Lloyds, Barclays, and Santander UK.
In June, 2014, Lloyds sold a 38.5% TSB stake at 260 pence per share through an IPO, which valued TSB at ₤1.3 billion ($2.12 billion).
Lloyds said in a statement:
“The cash proceeds from the sale will be used for general corporate purposes and the transaction is not expected to have a material impact on the group, including its capital position.”
In July, Lloyds Banking Group announced a 50% fall in profit for H1 2014 to £574 million ($970.8 million) compared to the same period last year. The company said it was hit by legacy charges, including £600 million set aside for mis-selling PPI. It has set aside a total of £10.43 billion so far.
TSB Banking Group plc. is based in Edinburgh, Scotland. It has 631 branches and employs about 8,000 workers.