Has Lloyds got the TSB price right?

Britain's Lloyds Banking Group has priced the stock market listing of its TSB business at below book value. As Joel Flynn reports it's aiming to attract investors amid a flurry of new issues.

Published

about 1 month ago

Categories

Finance, World

Topics

Finance, Europe

People

Joel Flynn, Quentin Webb, Mark Priest

Places

United Kingdom

Companies

Lloyds Banking Group Plc, Etx Capital, Breakingviews Associate

Transcript

You might think finding buyers for a bank would be easy. But the planned stock market listing of TSB has been anything but. Lloyds has put a 15% discount on the bank's planned sale later this month. After several costly delays - and a flurry of other ipos - it wants to ensure the shares fly off the shelves. But ETX Capital's Mark Priest says market saturation could be a stumbling block. SOUNDBITE: ETX Capital Senior Trader, Mark Priest, saying: "There've been quite a few come recently and I think possibly people have a sort of- had a ring in their hands and just had a little bit of enough. I think it's a mixture of a little bit of also dissatisfaction with the banking sector which is why it's come under the low end of the range." European competition regulation means Lloyds has to sell the 631 branches which now form TSB - that's 6% of the entire UK network, or 4.5 million customers. The sale was a condition for approval of state aid during the financial crisis five years ago, which saw the British government buy 25% of it. But the timing of this month's listing isn't great, says Quentin Webb is from Breakingviews. SOUNDBITE: Breakingviews Associate Editor, Quentin Webb, saying: "There were a couple of deals in February and March which really didn't go so well. They were overpriced and a bit hypey and when the froth went out of those deals investors who stayed in would've lost money. So actually what this reflects is maybe a bit of welcome caution coming into the market." It's only the first part of a sale - three or four more could follow. And Lloyds can't afford to get the price wrong - the cost of the sell-off has already reached 1.6 billion pounds.