TSB Bank IPO worth investing in?

MoneySaverLog

When the details of the IPO are announced later this year would it be worth investing in TSB Bank Plc

Could it be profitable this time around, what are your thoughts?

Masomnia

As far as I can tell Lloyds TSB was always a well run and prudent bank, it was the shotgun marriage with HBOS that brought all that to an end. So I don't see why not.

Without knowing the details of the IPO, especially the price, it's impossible to tell.

Nicholas-bloody-Parsons

Yesterday Co-op bank was awarded "junk" status by the credit agencies. So it still appears that owning bank shares is still likely to be very risky.

Masomnia wrote: »

Without knowing the details of the IPO, especially the price, it's impossible to tell.

No doubt they will "clean up" the bit which will be flogged off. It will probably be sold off on the cheap, so i might consider a very short term punt. However, it is impossible to know as Masomnia says, without reading the prospectus.

waiax73

would be good to see their annual statements and base your decision on a bit more in-depth research.

Cheers

grey_gym_sock

i'm not sure exactly what they're selling. it doesn't have to bear any relation to the old TSB.

rb10

Masomnia wrote: »

As far as I can tell Lloyds TSB was always a well run and prudent bank, it was the shotgun marriage with HBOS that brought all that to an end. So I don't see why not.

Without knowing the details of the IPO, especially the price, it's impossible to tell.

No, it's actually the other way around for their retail portfolios (which is all that is relevant here - as far as I know, TSB wouldn't get any of the commercial c**p).

Lloyds TSB's retail (i.e. mortgages, current accounts etc) suffers from higher arrears than HBOS's and lower profitability.

(This is now slowly improving as LTSB products are all now managed using the ex-HBOS credit scoring policies etc.)

Why else, when told to sell off a proportion of their branches, would Lloyds Banking Group choose to sell LTSB and keep HBOS? It's because HBOS now gives them better customers and greater profits.

What's more, I would assume that Lloyds have chosen their worst-performing branches to sell - so it's the worst bits of their worst brand.

MoneySaverLog

rb10 wrote: »

What's more, I would assume that Lloyds have chosen their worst-performing branches to sell - so it's the worst bits of their worst brand.

I don't believe they have cherry picked the branches to sell. They are selling C&G branches and old TSB branches that were initially TSB Bank in the first place.

LTSB were forced into taking on a failing HBOS with all the toxic debt they had. I doubt they would have been allowed to just sell off HBOS again.

opinions4u

MoneySaverLog wrote: »

I don't believe they have cherry picked the branches to sell. They are selling C&G branches and old TSB branches that were initially TSB Bank in the first place.

They were closing the C&G branches until the EU forced the sale. So they "cherry picked" those to make up the numbers.

LTSB were forced into taking on a failing HBOS with all the toxic debt they had. I doubt they would have been allowed to just sell off HBOS again.

I would hazard a guess that the first EU proposal was to sell off the Halifax and BoS branches. It was actually the obvious and easiest solution to the competition / market share / punish the bailout. But LBG rapidly reversed the C&G decision and came up with a list of branches (which, I believe, were both TSB and Lloyds in the past) to try and satisfy the Commission.

They clearly wanted to keep the smarter, sharper and better located Halifax and BoS networks.

I'm led to believe that the Verde branches and their associated portfolio of accounts went through an external audit for quality and, after some minor changes, were deemed to be, overall, marginally higher standard than the Lloyds TSB branches to be retained by LBG. In other words the EU made sure LBG weren't simply selling off the crap.

The paragraph I've just written is actually a strong case for buying shares in the new bank. That said, we don't yet know how well capitalised it will be or what the loan deposit ratio is. So we're a long way off knowing what a good price is.

As for rb10's comments above, HBOS retail (as in the branch networks, call centres and web sites) remained profitable throughout 2008 even as the bank sank. Because Bank of Scotland Corporate and Bank of Scotland Ireland were what sank HBOS. Not the well run branch network.

Ultimately, the EU objective was to reduce LBG market share by a set date. How this was achieved was up to LBG. Subject to meeting a quality threshold.

EarthBoy

MoneySaverLog wrote: »

I don't believe they have cherry picked the branches to sell. They are selling C&G branches and old TSB branches that were initially TSB Bank in the first place.

The branches for sale are not the same as the old TSB branches; they are a selection from the whole branch network and some of them will never have been TSB previously.

However, they do seem to have cherry picked them. In Sheffield city centre there are three branches of LloydsTSB, two of them within 100 metres of each other, -one is an old TSB branch. None of these three branches are being sold and the only "new" TSB branch will be the Cheltenham and Gloucester, which is hidden away on a side street. Here, Lloyds are clearly keeping the prime locations.

pqrdef

Find a maker of 10-foot bargepoles and buy that.

Retail banking is in the same boat as the press and high-street retailing. It no longer has a business model. These things all relied on customer familiarity and loyalty to protect margins, but the internet has made customers fickle.

So there's no profit in these trades any more, and the only way forward is not-for-profit mutuals providing services at cost.

pqrdef

EarthBoy wrote: »

However, they do seem to have cherry picked them. In Sheffield city centre there are three branches of LloydsTSB, two of them within 100 metres of each other, -one is an old TSB branch. None of these three branches are being sold and the only "new" TSB branch will be the Cheltenham and Gloucester, which is hidden away on a side street. Here, Lloyds are clearly keeping the prime locations.

But they're flogging the Meadowhall branch, which I don't suppose has many customers of its own, it's mostly used by customers of other branches calling in while shopping. Which they'll no longer be able to do. Will it earn its expensive keep as a quiet TSB branch? I doubt it. I wouldn't be too surprised to see TSB moving out and Lloyds moving back in. Which will please the mall management no end, because they're all about footfall.