Lloyds Banking Group sells additional 11.5% stake in TSB

Lloyds Banking Group has sold an additional 11.5-per cent stake in TSB in a £161-million share placing to investors that required no discount to the market price following strong demand, Reuters reported.

According to Lloyds, it sold 57.5-million shares at 280 pence, which left it with a 50-per cent stake in the smaller bank. It is a further step towards meeting a deadline to sell off all of TSB by the end of 2015 - set by European regulators as a precondition for Lloyds' government rescue during the financial crisis.

Sources familiar with the matter said demand for shares outstripped the number available several times over, enabling Lloyds to sell the shares to mainly long-term investors.

The sale attracted interest from investors in the US as well as Europe and buyers had been found to cover the sale within an hour of its commencement after the market closed yesterday.

Investors were attracted by an exposure to the UK's economic recovery via a bank that was untainted by issues of past misconduct, industry sources said.

They saw TSB as a viable challenger to the UK's "Big Four" banks - Lloyds, Royal Bank of Scotland, Barclays and HSBC.

TSB was one among several UK banks that had either recently listed on the stock exchange or were preparing to do so. According to commentators, the success of the latest sale could encourage other banks considering listing.

State-owned Lloyds had announced it was selling another slew of shares representing 11.5 per cent of its stake in the bank, priced at 280 pence per share, citywire reported.

The sale would, however, be open only to institutional investors, unlike earlier sales that included retail investors. According to Lloyds it would not dispose  any more shares for 90 days.

In May Lloyds Banking Group unveiled plans to float TSB, offering investors a free share for every 20 bought in a bid to offset the lack of dividend payments for three years.

According to Lloyds it expected to divest the remainder of its stake by 31 December 2015.