Lloyds Banking Group Plc’ share price down, to price its TSB unit below book value for Initial Public Offering

People close to the process revealed that Lloyds Banking Group Plc is ready to value its TSB unit at about 15% below the divisions book value on Monday as the initial public offering is about to be carried out. The bank group, which is one-fourth owned by the state, is selling its consumer-lending unit TSB Bank Plc and is about to announce the pricing for the initial public offering as it is trying to sell about 25% of its stake in TSB.

According to people with knowledge of the matter, who asked not to be identified, because the issues are private, Lloyds Banking Group is likely to value its TSB unit between 1.2 billion and 1.4 billion pounds, which is lower than its book value that amounts to more than 1.5 billion pounds. Still, this value is higher than the one the group would have received from the Co-operative Bank in case the planned acquisition was finalized.

Today, the group revealed that the pricing for the initial public offering of TSB Bank Plc would be between 220 and 290 pence per share for the 25% stake of the division that is to be sold.

The sale itself is planned to be carried out before the end of June. The decision of selling many of its branches has been made by the group under the influence of European competition regulators. The Group said on Monday that the final pricing of TSB will be announced on or around June 20th.

Currently, the TSB division of Lloyds has 631 branches, which amount to about 6% of the total networks in the U.K. The unit also has about 4.5 million customers, which makes it the seventh largest British retail bank. 23.3 billion pounds in deposits and 19.7 billion pounds in mortgages and loans were included in TSB Bank Plc balance sheet at the end of March 2014.

Both Lloyds Banking Group Plc and the consumer-lending unit TSB Bank Plc refused to make any comments on the information.

Lloyds Banking Group Plc was 1.05% down to trade at 79.31 pence per share by 7:31 GMT, marking a one-year change of +27.26%. 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 11.67% increase from the last price of 80.15.