May 13, 2014 / 4:35 PM / in 3 years

EU approves Lloyds' plan for TSB IPO

LONDON (Reuters) - The European Commission has approved plans by Lloyds Banking Group (LLOY.L) to list hundreds of branches renamed TSB on the London Stock Exchange, paving the way for a flotation before the end of June.

A man walks past the entrance to the head office of Lloyds Banking Group in the City of London December 11, 2013. REUTERS/Olivia Harris

The Commission said on Tuesday it had extended an original deadline of November 2013 for Lloyds to sell off the 631 branches to the end of 2015. Lloyds had planned to sell the branches to the Co-operative Bank but that deal fell through last year when a 1.5 billion pound ($2.5 billion) capital shortfall at the Co-op was exposed.

Lloyds was ordered to sell the business by European regulators as a condition of its 20.5 billion pound government bailout during the 2008/09 financial crisis. It opted for an IPO when the planned sale to the Co-op collapsed.

European Union Competition Commissioner Joaquin Almunia said establishing TSB as a standalone bank would increase competition in UK retail banking and create a “viable and competitive bank”.

“The proposed changes in the divestment perimeter will enhance TSB’s profitability and preserve its viability as a challenger in the market,” Almunia said.

Banking industry sources expect the IPO to be launched in the last week of May and the stock to be listed before the end of June. Lloyds has said it will sell at least a 25 percent stake in the bank and that the sale will include an offer to private retail investors.

Reporting by Matt Scuffham; Editing by Steve Slater

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