Lloyds Banking Group PLC Prices TSB Below Book Value

Lloyds Banking Group (LSE: LLOY) (NYSE: LYG.US) will sell shares in its TSB business at between 220p and 290p, the state-backed UK bank announced in a statement this morning.

TSBAt the middle of the pricing range TSB would be worth £1.28bn, a 15% discount to its £1.5bn book value. The IPO market has cooled following disappointing after-market performance from the likes of Saga, and fashion retailer Fat Face recently abandoned its planned floatation amid tepid investor appetite.

Shares in TSB, which has 631 branches and 4.5m customers, will be made available to ordinary investors who will get one free share for every 20 they buy (up to £2,000) and hold for 12 months.

Lloyds, which is 25%-owned by the government, must sell its TSB stake to meet European Union rules to provide more competition after receiving state aid in 2008. Lloyds must sell its remaining stake by the end of 2014, and this is expected to occur in three or four tranches.

The prospectus for the IPO will be published later on today, and final pricing will be announced on 20 June with conditional dealings in TSB shares beginning on the same day.

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Mark does not own shares in any company mentioned.