Lloyds Banking Group plc has announced its intention to proceed with an initial public offering of TSB Banking Group plc.

Lloyds intends to sell approximately 25% of TSB as part of its divestment mandated by the EC. It is required to sell down its remaining stake before 31 December 2015.

The offer is expected to take place next month, with the publication of the prospectus in mid-June.

TSB has a customer base of 4.5 million retail customers and 631 branches, making it the seventh largest retail banking group in the UK by branch network.

Its balance sheet comprises primarily historically low-loss UK retail mortgages, funded by strong and stable customer deposits, while it benefits from significant economic protection against legacy issues, including historical conduct-related claims and losses and historical employment and pension legacy issues.

António Horta-Osório, group chief executive of Lloyds Banking Group, said: “The decision to proceed with an initial public offering of TSB is an important further step for the Group as we act to meet our commitments to the European Commission.

“TSB has a national network of branches, a strong balance sheet and significant economic protection against legacy issues. It is already operating on the UK high street and is proving to be a strong and effective challenger, further enhancing competition in the UK banking sector.”