what will happen to Llloyd TSB's share holder

Fuzzythinking

Hi guys

I hear government will pump billion of pounds into that bank and I have been offered to buy new shares. There is some aspect of things that I am not sure about:

1) What will happen to my existing share? Will my shares disappear or shrink?

2) Will I get dividend in 2009?

3) Is worth to invest a little more money in Lloyd TSB bank?

FT

opinions4u

Fuzzythinking wrote: »

Hi guys

I hear government will pump billion of pounds into that bank and I have been offered to buy new shares. There is some aspect of things that I am not sure about:

1) What will happen to my existing share? Will my shares disappear or shrink?
You will retain the same number of shares, but will own a smaller percentage of the company. One would hope that this is already reflected in the share price.

2) Will I get dividend in 2009?
Probably not - a reflection of the profitability of banking at present and the need to buy back the Government's stake sooner rather than later.

3) Is worth to invest a little more money in Lloyd TSB bank?
Not via the offer you refer to, unless this is cheaper than the share price on the open market. Even then, you need to assess the risks. If the economic situation worsens, the potential of bank nationalisations still exists which could wipe all value from your holding. The likelihood of lending growth in 2009 is pretty low as banks rely less on wholesale funds and more on savings deposits. Loan books will fall in size. Identifying new lending opportunities as the economy contracts won't be top of boardroom agendas.

FT

I think over 5 years+ you will probably do very well buying bank shares. The Lloyds/HBOS merger gives an extraordinary opportunity to dominate retail banking, but it's not yet clear if all of HBOS' dodgy corporate lending is out in the open, and the mortgage books of TMB and Birmingham Midshires may deteriorate more than the mainstream Halifax brand.

Fuzzythinking

Thank you for your information. I am slightly confused with Lloyd TSB website, dividend has been regularly paid every year (about 30p per share). How we know that Lloyd TSB will not pay dividend next year?

I am suprised to see a lot of existing Lloyd TSB share holders agreed with acquisition to HBOS knowing that their shares will be significantly reduced. Strange innit?

FT

sabretoothtigger

I reckon lloyds have the best case for recovery (out of the banks) because of the potential benefits of this merger

Very risky investment so something like 50 quid a month for the next 12 would be better then buying anything particularly now

Q's

1. shrink (this is already in the price)
2. no, but maybe some free shares
3. better odds then the lottery

opinions4u

Fuzzythinking wrote: »

Thank you for your information. I am slightly confused with Lloyd TSB website, dividend has been regularly paid every year (about 30p per share).
Banking used to be extremely profitable. That said, dividend payments had been accelerating faster than profit increases for many years. 30p a share would represent a return of around 25% on current value. Not going to happen after the worst year EVER for British banks.

How we know that Lloyd TSB will not pay dividend next year?
We don't. I said "probably". But I think it would be strange to pay 12% interest to HM Government for longer than necessary. Capital growth in share price could be better achieved by buying out the Government holdings. That's a personal view. Others may see things differently.

I am suprised to see a lot of existing Lloyd TSB share holders agreed with acquisition to HBOS knowing that their shares will be significantly reduced. Strange innit?
Most shareholders are institutions with holdings in both companies. If they rejected the merger they would very possibly lose all value in their HBOS holdings as the Government would almost certainly have nationalised it with a view to winding down assets Northern Rock style.

FT

Once the bad lending has been fully cleansed out of HBOS, the new company will have massive clout with a great potential to save money by cutting duplicate jobs. This will mean higher returns to shareholders.

HBOS Retail is a bigger operation than Lloyds retail, so provides shareholders with real potential for gains in the long run. I suspect HBOS Corporate will get butchered with any remaining profitable clients assimilated in to Lloyds fairly quickly.

Geriatric

Lloyds Bank offer is at 173.3p Closing price today 126p
Closing day 9/01/09 but only the stupid would bank on the market price going higher than the offer price. One to miss like the HBOS offer at 113.6p and a market price of 69p.

Geriatric

As far as Llloyds paying a dividend in 2009 I would not "bank" on it. With the enlarged capital following the HBOS acquisition and the writeoffs that must result together with the way things look for next year I would think that they will be in the red. Further down the line as opinions4U says the potential for recovery should be good

agsnu

Fuzzythinking wrote: »

I am suprised to see a lot of existing Lloyd TSB share holders agreed with acquisition to HBOS knowing that their shares will be significantly reduced. Strange innit?

Well, uh, Lloyds TSB shareholders have already seen a massive reduction in value of their holdings... Not only because their price on the open market has plummeted, but also because they've had to take a massive equity investment from the Government in order to stay afloat. Because, you know, if they had gone under, your shares would basically be worthless (c.f. Northern Rock, B&B, etc). And remember the chancellor said that Lloyds/HBOS would only get a cash injection if the merger went ahead.

So basically, no, it's not strange. It's the sanest, least resistance path towards Lloyds actually staying in business, and therefore in your best interest.

sabretoothtigger

Most customers dont understand how the bank could get so poor so quickly.




These banks only exist so long as people believe in them.
Our view of banks is fort knox gold reserves but all the money they hold is other peoples and they borrow it to invest for a profit, if its lost then

Blah99

That's exactly why, traditionally, banks have had expensive, lavishly decorated, imposing buildings in high value areas. It goes back hundreds of years to when banks needed that kind of presence to demonstrate to customers that they were rich, profitable and safe.

Fuzzythinking

Hi again

I need advice regarding Lloyd Shares. At the moment, the price of Lloyd TSB is about £1.25 per share. I have recently been offered to buy more share (1.733 per share). When deadline expires, will the price automatically start from £1.733 instead of £1.25, for example?

Please confirm it

FT