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Bid target talk surrounds Lloyds TSB
Shares soar as bank linked with suitors Simon Page Fresh bid speculation sent shares in high street bank Lloyds TSB surging to its highest level in three years yesterday.
The UK's fifth largest bank was in the spotlight again after rumours swept the market linking it with potential suitors from the United States and Europe.
Lloyds TSB declined to comment on the talk but its shares moved to the top of the FTSE 100 Index risers' board with a gain of more than 5 per cent. Trading volumes by mid-morning were twice the level seen throughout Tuesday.
Dresdner Kleinwort Wasserstein analyst Simon Maughan said there was "idle speculation" in the City of a possible 700p a share bid – worth 39.2bn and well above Tuesday night's closing share price of 509.5p. Shares closed 25.5p higher at 535p last night.
Mr Maughan said: "There are some vague rumours that a US bank is preparing a deal, but it is rather vague who the American suitors might be.
"From a European perspective, Spain's Banco Bilbao Vizcaya Agentaria is seen as a possible buyer."
Lloyds TSB has long been seen as a bid target, with US banks Wells Fargo and Bank of America mentioned as possible suitors.
Richard Hunter, head of UK equities at Hargreaves Lansdown Stockbrokers, said shares in Lloyds TSB offered investors a double boost.
He explained: "Quite apart from the constant takeover speculation that will not go away, it has also got a great dividend yield," he said.
"It is getting on for between 6.5 per cent and 7 per cent which is well above the Footsie average of around 3.5 per cent."
Mr Hunter said there was likely to be further consolidation of banks in Europe with Lloyds TSB very much in the frame.
"The story surrounding Lloyds TSB is one that has been going around for some time now and on that basis it is one of the more favoured UK banking stocks," he said.
Banco Bilbao Vizcaya Agentaria (BBVA), which was recently linked with a bid for Italy's Banca Nazionale del Lavoro, has 35 million customers in 32 countries and employs 91,000 staff.
It can trace its roots back to 1857 when the Spanish Board of Trade sponsored the creation of Banco de Bilbao as a currency-issuing and discount bank.
The group known as BBVA was created in 1999.
Wells Fargo is based in San Francisco and provides banking, insurance, investments, mortgage and consumer finance for more than 23 million custo- mers.
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Wednesday 23 May 2012
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