Financial News

  • 28 March 2014, 11:31

TSB Says Yes To Six Banks For 1.5bn Listing

A group of six investment banks is being lined up to oversee the 1.5bn stock market listing of TSB, as City investors complain that too many firms are hired to work on such deals.

Sky News has learnt that Lloyds Banking Group, the current owner of TSB, is close to appointing UBS, Investec, Numis Securities and Royal Bank of Canada to work alongside Citi and JP Morgan on the demerger.

The appointment of the full line-up of advisers comes weeks before Lloyds is expected to press the button on the flotation, with the precise timing dependent upon stock market conditions.

The presence of such a substantial syndicate may prompt scepticism from some institutional investors, which have argued that they diminish the scope for independent research by analysts and reduce the justification for sizeable bank fees.

Lloyds, which is now 25%-owned by taxpayers after a 4.2bn share sale by the Treasury this week, has to sell TSB under the orders of the European Commission in return for the 20bn of state aid it received when it was bailed out in 2008.

Lloyds had planned to sell the 630 branches to the Co-operative Group, a plan which was abandoned because of the financial crisis which engulfed the mutual last year.

In a letter released on Thursday, Andrew Tyrie, chair of the Treasury Select Committee, asked George Osborne, the Chancellor, to detail the extent of contact between Coalition ministers and the various stakeholders in the TSB auction.

"Did Treasury Ministers or any Treasury officials at any time bring undue pressure to bear on the Co-operative Bank or Group, or Lloyds Banking Group, in respect of the sale of the Verde [Lloyds] branches?", Mr Tyrie wrote.

His questions were prompted by repeated claims from Lord Levene, who chaired a rival bidder for the Lloyds business, that there was extensive political interference in the auction.

Paul Flowers, the disgraced former chair of the Co-op Bank, appeared to support that view in an interview earlier this week.

TSB was relaunched on high streets in September and has pledged to restore local banking services to British communities.

The bank has a 4.3% share of the current account market and under the stewardship of Paul Pester, chief executive, wants to increase that to at least 6%.

Lloyds has agreed to provide hundreds of millions of pounds in additional funding to the network to ensure that it is a more powerful competitor to its erstwhile parent as well as banks such as Barclays and HSBC.

TSB will also make a series of commitments this year about executive pay and transparency of lending decisions as it tries to distinguish itself from its high street rivals, many of whom remain tainted by mis-selling scandals which pre-date the financial crisis.