To entice small shareholders, Lloyds is offering one free share for every 20 bought up to pounds 2,000 if they are held for a year. TSB will not, however, pay dividends until 2017, which is likely to affect the group's valuation. Chief executive
Lloyds will sell a 25% stake in TSB initially and has to sell the rest by the end of 2015 in line with EU rules linked to the terms of the bank's government bailout in 2008. Shares are likely to be priced at less than TSB's book value of pounds 1.5bn.
After an abortive attempt to sell off its TSB branches to the
The bank has held two rounds of investor meetings this year to drum up interest and believes there is good demand, particularly from the US and south-east
Lloyds' chief executive,
The prospectus for the sell-off will be published in mid-June, and Pester has already said that TSB would not pay a dividend until 2017.
"The initial valuation has been set at around pounds 1.5bn, but could well be less given that the appetite for IPOs appears to be showing some signs of waning or summer fatigue," he said, noting that of the IPOs launched this year only
"Then there is RBS, with their own stake sales and the forced divestiture of their Williams & Glyn branches . . . At least TSB has the advantage of going first."
The number of shares small investors will have to buy to get one free. They will also have to hold their shares for at least a year
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