TSB, based in London, became Britain’s 7th-largest lender after being spun-off its parent company (Lloyds Banking Group) in June of 2014. Lloyds was forced to offload 631 branches to comply with European Union state aid settlement as a condition of the government bailout that amounted to 20 billion pounds during the banking crisis. Moreover, TSB stated the proportion of the U.K. checking account market as much as 4.2 percent. On June 20th of 2014, TSB BANKING GROUP PLC listed in the FTSE MID 250 Stock that consists of 250 UK companies ranked form 101st to the 350th based on the value of issued shares. The initial public offering (IPO) priced TSB at 1.3 billion pounds in the London Stock Exchange (LSE). TSB’s Earnings per share ratio (EPS) of 0.34 pence in 2013 indicates higher performance of the profit attributable to each share, in compared with EPS of 0.06 pence in 2012. Similarly, it’s Return-on-equity (ROE) of 11.23 percent revealed stronger performance of bank’s profitability and growth potential in comparison with the 3-year average of 6.30 percent as a view of the world’s secondary markets display weak form & semi-strong form Capital Market Efficiency (CME).
2.2 Episode 1 (2014/6/20 – 2014/10/16)
On June 20th of 2014, the share price of TSB rose more than 11 percent in value which correlated with Lloyds Banking Group plc sold 35 percent stake of the company (175 million shares) to raise 455 million pounds that more than 25 percent of planned stake. The underpinning law of supply and demand ought to be explained that investors believed the share price rises as strong demand from investors. (Sky News 2014) Furthermore, the large trading volume of 95 million reflected London Stock Exchange (LSE) is consistent with weak form and semi strong form capital market efficiency (CME). In the context of TSB planning to bid for 1.4 billion pounds worth of residential loan book of UK Asset Resolution (UKAR), which was nationalized by British Government during the financial crisis. (Reuters 2014) On July 31st of 2014, the share price gained 1.4 percent to 286 pence and the stock has increased 10 percent in comparison with its IPO at 260 pence. TSB stated increased costs that from 105.1 million pounds to 333.5 million pounds, which has meant that additional expenses from operating expenditures as a separate company to Lloyds.