TSB plans to offer bonus shares to long-term investors

Tim Wallace
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NEW HIGH street bank TSB is expected to try to attract more long-term investors by offering a bonus for those shareholders who stick with the business.

The lender is being sold off by Lloyds, and the details of the stock market flotation could be announced as soon as today.

It wants the initial public offering (IPO) to be completed by the end of next month, in a deal which could value the spin-off bank at £1.5bn. The flotation will include a retail offering to customers and small investors who will be able to buy shares through stockbrokers, as well as an offer to institutional investors.

Those who hold shares for a full year are expected to qualify for bonus shares as an incentive to stay with the bank, Sky News reported.

The incentive could amount to one free share for every 20 bought in the flotation.

TSB is made up of 630 branches carved out of Lloyds in an effort to create more competition in the market – a condition imposed upon Lloyds by the European Commission as part of the bank’s 2008 bailout.

The lender is building its brand as a locally focused, well behaved lender in a break from the pre-crash image of banks.

Since re-branding on the high street in September 2013 it is thought to have gained current account customers from all the main banks, but lost business customers as it re-focuses on small firms and startups.

The bank is expected to be sold in two or three chunks, and has to be completely out of Lloyds’ hands by the end of 2015.

If markets remain upbeat, the sale could be complete as soon as the start of 2015. However, investors could be wavering after the Saga flotation came in at the bottom of its price range, and Fat Face’s IPO was pulled after a lack of sufficient interest.

TSB declined to comment on the upcoming IPO.