Lloyds Banking Group is to sell a further 11.5 per cent stake in TSB Banking Group, leaving it with a 50 per cent shareholding in a business it was ordered to shed by European regulators.

Lloyds said it would sell another 57.5 million shares, worth about 161 million pounds ($262.6 million) at current share prices, to financial institutions through a so-called "accelerated bookbuild." UBS is advising Lloyds on the sale.

Reuters reported on Tuesday that Lloyds was preparing to launch a second sale of TSB.

Lloyds had sold a 38.5 per cent stake in TSB in June at 260 pence per share through an initial public offering, which valued Britain's seventh largest bank at 1.3 billion pounds. The sale was 11 times over-subscribed following strong demand from investors in the United States and Asia as well as Britain.

Investors were attracted by an exposure to Britain's economic recovery via a bank which is untainted by issues of past misconduct. They also saw TSB as a viable challenger to Britain's 'big 4' banks - Lloyds, Royal Bank of Scotland , Barclays and HSBC.

European regulators forced Lloyds to sell the 631 branches which now form TSB as a condition for getting a 20.5 billion pound government rescue during the financial crisis.

The latest sale is expected to be priced at a point between the 260 pence level of the IPO and TSB's closing share price of 280 pence on Thursday, according to industry sources.

The price will be decided after interest from potential buyers is assessed on Thursday. The sale is expected to be completed before trading begins on Friday. One source familiar with the matter said buyers had been found to cover the sale within an hour of it being launched.

TSB is one of a number of British banks that have either recently listed on the stock exchange or are preparing to do so, tapping into investor appetite for newcomers aiming to challenge the established banks.

Aldermore said on Monday that it planned to list in London next month, in a debut that could value it at up to 900 million pounds. Virgin Money, backed by entrepreneur Richard Branson, is expected to list later this year.

The sale will leave Lloyds well-placed to meet a deadline of selling its entire stake in TSB by the end of 2015. Industry sources say it is possible the remaining shares could be sold in two stages.

Lloyds has said that it will not sell any more shares in the bank for 90 days following the latest placing. - TradeArabia News Service