News Column

Business Postscript: COMPANIES: IMF alarm at inequality: Welcome to a new bank - just like the old one

June 1, 2014



Lloyds Banking Group announced last week that it was floating 25% of its TSB subsidiary next month, with up to a fifth of the shares expected to be snapped up by retail investors.

After an abortive (and hilarious) attempt to sell off its TSB branches to the Co-operative Group last year, Lloyds has been left with few options than to take a punt on the IPO market - just as investors start showing signs of flotation fatigue following a flurry of debuts this year.

To entice small shareholders, Lloyds is offering one free share for every 20 shares bought (up to pounds 2,000) if the shares are held for a year. Some predict that they'll be getting a company on the cheap: the odd City analyst now expects Lloyds to make a loss on the sale, with the shares likely to be priced at less than TSB's book value of pounds 1.5bn.

So will the public be buying a dynamic new kind of bank that differs from its peers? Er, maybe not. The standalone TSB will not issue dividends for at least three years - much like its parent, which hasn't paid one since its 2008 bailout.

Captions:

Lloyds is expected to make a loss on TSB.



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Source: Observer (UK)


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