Lloyds Banking Group Progeny TSB Opens Doors

Jacob Harper |

Lloyds Banking Group plc (LYG) , still struggling to accommodate governmental demands to downsize considerably following a UK taxpayer bailout, made a major move towards splitting up on Monday when they opened the doors of TSB, a new banking subsidiary that will eventually become a separate business entirely. Once it becomes fully independent in 2014, TSB will become the 8th largest lender in the UK.

Lloyds was targeted by the UK government in 2009 after the bank nearly failed and required a government bailout to stay afloat. Following the taxpayer rescue, the bank was ordered to split up as punishment. With the creation of TCB, the bank has attempted to satisfy the government’s demands, although the creation of a subsidiary instead of outright splitting has already caused consternation, and not just from the government.

On the first day of business, the nascent bank has already been met with scorn from customers, some of whom found themselves with their money in an entirely new bank, in some cases miles from the nearest branch, or if they had multiple accounts, finding out their accounts had been split. While breaking up a bank is never an easy process, the fact that the TSB launch is already meeting with dissatisfied customers, many of whome were unaware a split was even taking place, is a foreboding sign.

There’s the additional problem that by merely creating a subsidiary that still answers to Lloyd’s management with a loose timetable for independence might not even be enough to satisfy EU regulators.

Following the bailout, the UK government took a 39 percent stake in the bank, and has already taken a heavy hand in directing the bank’s future. If the TSB move, already off on a bad foot, fails to impress regulators, the bank could be facing even further sanctions from the government.  

Lloyds was up 2.86 percent on the split to hit $4.85 a share. The bank is up 43.90 percent on the year.


(image courtesy of Wikimedia Commons)

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Symbol Name Price Change % Volume
LYG Lloyds Banking Group Plc American Depositary Share 3.74 -0.11 -2.86 3,697,306 Trade
GFRSF Grupo Financiero Santander Mexico SAB de CV n/a n/a n/a 0


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