TSB will be valued at up to £1.45bn for its stock market flotation

Announcing further details of the long-awaited stock market flotation, Lloyds said that TSB shares will be priced between 220p and 290p, giving the challenger bank a mid-point valuation of £1.275bn.

That compares with the £750m that the Co-op agreed to pay for the branches before the discovery of a £1.5bn hole in the mutual’s balance sheet caused the deal to collapse in April 2013.

The final pricing for the offer will be announced on around June 20, when conditional dealings in the shares will also get under way.

TSB has 631 branches and is being offloaded by Lloyds in order to meet EU rules on state aid following the group’s rescue at the height of the financial crisis.

Lloyds, which also includes Halifax and Bank of Scotland, is still 25 per cent owned by the taxpayer.

Its shares opened lower yesterday as the announcement of the price range valued TSB at below the £1.5bn reportedly on the books of Lloyds.

The pricing range reflects caution following the recent disappointing performance of other stock market flotations, with over 50s insurance and holidays group Saga among those to have seen shares decline.

TSB stock will be made available to institutional investors as well as intermediaries selling to ordinary retail shareholders.

The retail offering contains an incentive allowing each retail investor to receive one free share for every 20 shares acquired, up to the value of £2,000.