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State-backed Lloyds Banking Group PLC has increased the number of shares it is selling in its TSB unit amid strong investor demand.

The bank, which was bailed out during the 2008 financial crisis, is now selling more than 35% of the unit, rather than the 25% initially planned. The opening price was put at 260 pence–an amount which valued the company at £1.3 billion (US$2.2 billion.)

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Lloyds also instructed the underwriters to deploy an over-allotment option to accommodate demand, so when the entire sale is completed it will constitute a 38.5% stake of the bank.

Lloyds says gross proceeds realized by the sale will be 455 million pounds.

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Group CEO Antonio Horta-Osorio said the demand reflects confidence among investors and that it will be an effective competitor in Britain.

“TSB has a national network of branches, a strong capital base, robust liquidity and significant economic protection against legacy issues,” he says.

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The group has to float TSB to meet European Union rules on state assistance. It had planned to sell the 631 branches to Co-operative Group–but the deal collapsed when Co-op found a big hole in its own balance sheet.

Originally published on Advisor.ca

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