buying bank shares

ExBanker_2

HBOS is gambling, Lloyds is an investment. If the merger fails to go through- Lloyds shares go up. If the merger go's through- Lloyds shares go up. You cant lose long term with Lloyds!

HBOS could well be fully nationalised if the merger doesnt go ahead. You could stand to lose eveything!

equitydealer

All depends on your risk profile. Bank shares are obviously high risk at the moment, the only exception I believe being HSBC.

Looking out over 10 years you might get a decent return, but I think with the economy slipping into recession the banks might get dragged down with increasing bad debt and falling house prices. 2009 might be a very bad year!

Also when the share prices of RBS & Lloyds HBOS recover the Government has stated that it intends to sell its shares. Depending on how they exit both companies there will be a flood of shares entering the market.

Not intended as advice, just personal opinion

mrposhman

I bought RBS shares on Monday, just missed out on the 50p price which was annoying but hey things happen!! I ought to keep better organised!!

Anyway, considering possibly a few more tomorrow or maybe Lloyds but we'll see about that.

Whether RBS is 60% owned by the govt is largely irrelevant. The shares WILL be issued whether to private investors or the government. You just have to look at the current values etc of the business and look at what you expect future profits to be.

I would expect massive writeoffs in December, allowing profits to be made next year. Obviously this years loss will be carried forward meaning limited tax will be paid next year (I wonder if Darlings aware!! ). I would expect some quite large provisions to go in by the end of the year for all banks in preperation for refunds of bank charges, so don't be surprised if there are massive writeoffs this year but I would fully expect EPS to rise again next year encouraging share price increases.

I would agree that the exit strategy will be interesting. Expect it to be phased, and probably offered to current shareholders first, possibly at slightly lower than market value to encourage a quick buy up.

I wouldn't like to make a guess at when but shares in Lloyds and RBS will increase again, but don't expect it to go back to what it was, remember there will be WAY more shares in circulation.