The largest mortgage lender in the U.K. – Lloyds Banking Group Plc – announced that it has decided to sell a 25% stake in its TSB consumer bank in an initial public offering that is to take place in June this year.
The Chief Executive Officer of Lloyds Banking Group Plc – Mr. Antonio Horta-Osorio said in the banks official statement, which was cited by Bloomberg: “TSB has a national network of branches, a strong balance sheet and significant economic protection against legacy issues. It is already operating on the U.K. high street and is proving to be a strong and effective challenger.” As reported by the Wall Street Journal, Chief Executive Officer Horta-Osorio also said: “The decision to proceed with an initial public offering of TSB is an important further step for the group as we act to meet our commitments to the European Commission.”
The TSB division of the bank is to be listed on the London Stock Exchange in June this year. The countrys regulatory authorities hope that such a move of the company will increase the competition in the retail-banking market of the U.K.
Currently, Lloyds is partially owned by the British government, which holds a 24.9% stake of the bank. In 2009, the European Union made the company sell more than 600 retail branches. Currently, the TSB division complies of more than 600 branches and has more than 4.5 million retail customers. As a result, it is the seventh biggest retail bank institution on the territory of the U.K. The TSB division has not planned to pay a dividend any time sooner than 2017.
As reported by the Financial Times, the Chief Executive Officer of the TSB unit of Lloyds – Mr. Paul Pester commented on the banks decision, saying: “Our business is all about growth. We plan to invest every penny we can in growth so we will not be paying significant dividends. That will affect our valuation.”
Lloyds Banking Group Plc was adding 1.36% to trade at 77.00 pence per share by 10:46 GMT, marking a one year change of +28.08%. According to the information published on the Financial Times, the 26 analysts offering 12-month price targets for lloyds Banking Group Plc have a median target of 89.50, with a high estimate of 115.00 and a low estimate of 55.00. The median estimate represents a 20.96% increase from the last price of 73.99.
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