DOW JONES NEWSWIRES
Lloyds Banking Group has been forced into offloading its TSB
retail unit at a reduced valuation in the face of deteriorating
investor appetite for flotations, the Times in the U.K. reported
Monday.
Worries also surfaced over TSB's profitability as it emerged
that it made just 31 million British pounds last year, the Times
said.
Lloyds is expected to announce Monday a price range for the
imminent initial public offering of TSB, which values it at about
0.7 to 0.9 times its net assets, or 1.1 billion to 1.4 billion
pounds, the Times said. By other valuations, TSB will still be
highly priced, selling at a price/earnings multiple of 40 times
last year's underlying pretax profit, the Times said.
Even if it achieves its profit target of 64 million pounds for
the present year, the p/e ratio still will be 20, the Times
said.
Analysts said that Lloyds was responding to the deteriorating
appetite for flotations, the Times said. James Chappell, of
Berenberg Bank, said, "It's less than Lloyds would have hoped for
three months ago. TSB is thought to be making substantially less
than its cost of capital."
The company said it would float its TSB unit on the London Stock
Exchange this month, a move regulators hope will boost competition
in the British retail-banking market. Lloyds is 24.9% owned by the
U.K. government, and was ordered by the European Union to sell more
than 600 retail branches in 2009 after its government bailout.
Newspaper website:
www.thetimes.co.uk
Write to Dennis Baker at dennis.baker@wsj.com
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