Lloyds announces TSB listing with ‘buy 20, get one free’ offer

published 27 May 2014

The long-awaited TSB flotation will happen next month.

Lloyds Bank (LSE: LLOY) today announced plans to sell off 25% of TSB in an initial public offering (IPO) in June. Shares will be made available to both institutional and retail investors.

Under the terms of the sale, retail investors will receive one bonus' share for every 20 shares bought, up to £2,000, on the condition that the shares are held for a continuous 12 months.

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The sale is prompted by an EU ruling after the government bailed out Lloyds back in 2008. The EU insisted that the TSB should eventually be sold off, with all Lloyds shares sold by the end of 2015.

With 4.5 million customers, TSB is currently the UK's seventh biggest retail bank. It has 631 branches across the country, and emphasises responsible local' banking. In March this year, it launched its TSB Plus current account offering a 5% interest rate.

According to its chief executive, Paul Pester, TSB has "the mindset and growth potential of a challenger, but with the scale and capabilities of an established player". Pester also said that the business has got off to a strong start as a separate bank it's been opening four to five times as many current accounts in its braches as it had done when the banks were branded as Lloyds TSB.

Pester, however, warned that the TSB wouldn't pay any dividends until 2017.

We can also expect further share sales from Lloyds over the next year. The government reduced its 39% holding to 33% when it sold shares last September.

James Ferguson covered Lloyds in his cover story from March, when he looked at the recovery of Britain's banking sector. He noted that "there is a lot of pressure on the bank to look good", but its large exposure to the housing market makes it look risky.

We won't know the full details of the float until the prospectus is published in mid-June. Until then, it's probably too early to say whether TSB shares are worth buying with or without the bonus' share offer.

Chris Carter spent three glorious years reading English literature on the beautiful Welsh coast at Aberystwyth University. Graduating in 2005, he left for the University of York to specialise in Renaissance literature for his MA, before returning to his native Twickenham, in southwest London. He joined a Richmond-based recruitment company, where he worked with several clients, including the Queen’s bank, Coutts, as well as the super luxury, Dorchester-owned Coworth Park country house hotel, near Ascot in Berkshire.

Then, in 2011, Chris joined MoneyWeek. Initially working as part of the website production team, Chris soon rose to the lofty heights of wealth editor, overseeing MoneyWeek’s Spending It lifestyle section. Chris travels the globe in pursuit of his work, soaking up the local culture and sampling the very finest in cuisine, hotels and resorts for the magazine’s discerning readership. He also enjoys writing his fortnightly page on collectables, delving into the fascinating world of auctions and art, classic cars, coins, watches, wine and whisky investing.

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