How Will Lloyds Banking (LYG) Stock React To TSB Stake Sale Below Book Value?

NEW YORK (TheStreet) -- Lloyds Banking Group Plc (LYG) will reportedly launch the sale of at least 25% of its TSB business beginning next week via a stock market flotation with the pricing expected to be below book value, sources told Reuters.

The amount of stock sold is likely to be less than what some investors had anticipated, sources say, reflecting a cooling of investor interest in U.K. company flotations in recent weeks following a flurry of activity earlier in 2014, Reuters noted.

The bank's stock is flat in light trading.

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The IPO, which will happen before the end of June, is expected to value TSB at less than its book value of 1.5 billion pounds, meaning Lloyds will make a loss on the sale, sources added.

TheStreet Ratings team rates LLOYDS BANKING GROUP PLC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate LLOYDS BANKING GROUP PLC (LYG) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income and disappointing return on equity."

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