HBOS bail-out but why is the share price still so low ?

benood

miaviv wrote: »

The government has effectively part-nationalised HBOS today so why is their share price still taking a hammering ?

Presumably you don't remember how long it took BT to install a telephone line when they were a nationalised industry?

sabretoothtigger

Best case scenario has the banks levelling off and becoming the most boring stocks quoted.

Even if you hoped their last reported profits would stay consistent through the bad times, it'll be years and years before they can pay the debt off

EalingSaver

gaol wrote: »

Because the merger with LLoyds was renegotiated, from 0.8 to 0.6 Lloyds shares for every 1 HBOS share.

And AD on Today programme this morning, when asked what the effective share price the gov was paying for its/ours HBOS "said 65 1/2p". As someone had said only a few minutes before that the opening price was £0.75 I thought oops, that's just dictated the effective opening price today.

iamesbo

The essence of the deal is to force the bank to lend the goverments money (your taxes) out on overpriced houses and bankrupt business. You won't see a penny untill they start making money on all theis reckless lending, that is not likely to happen for a very lobg time, if at all.
The solution to reckless lending appears to be more reckless lending.
Will it work?
Yes for a short while, maybe a couple of weeks.

EalingSaver

gaol wrote: »

The recapitalization is dependent on the merger going through. To be fair, Lloyds are getting a massive bargain long term. As are taxpayers imho.

What I really don't understand. Lloyds was meant to be one of the most solid of the banks. Why is it taking up the govt offer of capital injection? Clearly wasn't quite as rock solid and well captilised as I thought. Yes its recap has been made a condition of it completing the merger, but they are talking about separate amounts for the two. QED Lloyds needed this money to meet the higher capital adequacy rations, whereas Barclays decided it didn't. Maybe Lloyds was not in quite such wonderful shape as we thought?

It looked a great deal for Lloyds (ok, providing the acquisition cost was appropriate) before this, as the monoplies and mergers was all waived. It would be seen as a saviour by this and future govs. etc. But now it has itself had to go for extra dosh, will the authorities be quite so reluctant at a point in the future when things have settled down to have the M&M take a look at how much of the market it has and look to sell some of its business off.

DelBoyPhil

in the long term thats a good deal and its cheap.. short term no good.. im sure that long term buyers like pensions they will buy loads of these any day now. trust me this share price will double in a week! 90.00 share for hbos today.. within a week that will double! RBS is 65.70 that will triple within 180 days!

but these are long term buys..

iamesbo

benood wrote: »

Presumably you don't remember how long it took BT to install a telephone line when they were a nationalised industry?

About the same time as it takes NTL to install a line, that's if your area is covered at all.

miaviv

But to reiterate the original question, are my savings safer now than they were last week and if so, how long for ? Is this a quick fix or is it going to save the bank permanently and what exactly does it mean when the share price drops again even when the bail out has happened ?

Just_landed

DelBoyPhil
Money Saving Newbie
in the long term thats a good deal and its cheap.. short term no good.. im sure that long term buyers like pensions they will buy loads of these any day now. trust me this share price will double in a week! 90.00 share for hbos today..

Would I not be right in saying the pensions already own loads of shares in HBOS along with the banks because the take up on the rights issue was a flop and the institutions were the back up at a lot higher price than the shares are now. Maybe this is part of the reason they are all in the !!!!!!.

blisk

miaviv wrote: »

But to reiterate the original question, are my savings safer now than they were last week and if so, how long for ? Is this a quick fix or is it going to save the bank permanently and what exactly does it mean when the share price drops again even when the bail out has happened ?

Take your pick.

Remember the bankng industry & governments didn't know what was going on until a few week ago. Iceland has gone bankrupt in the period of a week.

HBOS & RBS bank shares fell because even though they were being bailed out they had to take so much money & LLoyds wants to renegotiate HBOS deal which might fail otherwise leading to HBOS collapse.

They're basket cases.