Shares in TSB Banking Group were trading at 290 pence in early trading on Friday following its stock market debut, up 12 percent on the 260 pence price set for its initial public offering.
Lloyds Banking Group said it had sold more than a third of its TSB business in a stock market listing, more than originally anticipated following strong demand from investors for the new British bank.
Lloyds said on Friday it had sold a 35 percent stake in TSB to financial institutions such as pension funds and insurers and private retail investors.
Another 3.5 percent could be taken by JP Morgan Cazenove as part of its role as underwriter on the initial public offering (IPO).
The shares were sold at 260 pence each, towards the upper end of the indicated range, valuing the business at 1.3 billion pounds ($2.22 billion), or 0.8 times its book value. Thirty percent of the shares were sold to retail investors.
Lloyds, which was ordered to sell 631 branches by European regulators, had originally planned to sell only a quarter of its business in the first sale.
The IPO has attracted strong interest from investors in Britain and the United States and some interest from investors in Asia, sources familiar with the matter said.
Lloyds, which is 25 percent owned by the UK government, was told by European competition regulators to sell the branches as a condition for approval of state aid received by the banking group during the 2008 financial crisis.
"The successful initial public offering of TSB is an important further step for Lloyds Banking Group as we act to meet our commitments to the European Commission," said Lloyds Chief Executive Antonio Horta-Osorio.