Lloyds is to spin-off TSB with the announcement of a public flotation of approximately 25% of the high street bank in June.
‘TSB has a national network of branches, a strong balance sheet and significant economic protection against legacy issues,’ said Anonio Horta-Osorio, group chief executive of Lloyds.
‘It is already operating on the UK high street and is proving to be a strong and effective challenger, further enhancing competition in the UK banking sector.’
Retail investors in the initial public offering will be granted one free share for every 20 they buy, up to a limit of £2,000 and subject to a one-year holding period following admission.
The bank said it will target a dividend by 2017. The new business will continue to use Lloyds IT and payment services.
The new bank will have a client base of around 4.5 million investors and 631 high-street branches, making it the seventh largest retail bank in the UK.
The management team, which has been in place since 2011, believe they will be able to deliver 40% to 50% balance sheet growth over the next five years.
‘Today is a significant milestone on our journey to create a major new competitive force in UK banking,’ said TSB Banking Group chief executive Paul Pester.
‘As we prepare for life as an independent, listed entity we are aiming to deliver strong, steady and sustainable growth, over the long-term.
‘Our straightforward and simple approach to banking is designed to deliver the kind of bank people tell us they want: every penny our customers deposit with us is used to support mortgages and loans for other TSB customers.’