Shares in Lloyds TSB

oap

We have a number of shares In Lloyds TSB, now this was supposed to be a very safe buy, now we donot know whether to cash in or stick, seeing the news today makes us wonder, ie selling parts of the bank off, but surely they will have to pay the shareholders a reasonable sum.

We paid 50p for the shares.

Thanks, oap

dzug1

If you paid 50p for them it was at a time when they were far from a safe buy - unless this was back in 1986??

Yesterday they were selling for about 85p.

And yes they will pay the shareholders a reasonable sum, but it will be their view (or maybe the market's) of a reasonable sum which may differ wildly from yours.

oap

Hi all, can anybody tell us (as we did not sell any shares) whether it is wise to buy the shares on offer for the rights issue at 37p?

Won't hold you responsible!!!!

EdInvestor

It will be another 2 years before they can pay a dividend again. That might affect your view on whether you want any more shares.

chesky369

The problem which has to be faced if you don't buy, is that the rights issue will automatically and immediately dilute/devalue your holdings.

Biggles

You have several options, even if you don't want to put more money in.

From the FT:-

"Shareholders can take up their rights to buy the discounted shares. Private investors with the average holding of 740 shares have a full entitlement to 991 new shares, which will cost £366.67 to take up. But they can choose to buy just some of their allocation.

"Or they could sell their rights and receive a cheque for the proceeds. Investors who hold their shares through Lloyds’ nominee accounts or in certificated form can sell for free through the bank.

"If investors do nothing, their rights will lapse and will be sold by the bank on their behalf – which should also yield some cash.

"Cashless take-up or “tail swallowing” is another option. This involves selling sufficient rights to fund the take-up of some of the new shares, without requiring extra cash. Lloyds is offering free dealing to its nominee account shareholders who take this option."

notbritishgas

chesky369 wrote: »

The problem which has to be faced if you don't buy, is that the rights issue will automatically and immediately dilute/devalue your holdings.

This has already happened, the shares were trading at 58p at yesterdays close. So to maintain anywhere near the original value the rights should be taken up.
However if not taken up some cash should be received which will compensate a little but not increase with any future share increase.
I have decided to take up my rights but past experience has proved me to be the world's worst investor.

oap

Thank you,we intend keeping the shares we have, but buying the rights issue at 37p then selling on when they get above 60p, making a profit.
Seems logical. We only hold shares in TSB so are not too savvy with all of this.
Thanks again, oap

Jake'sGran

notbritishgas wrote: »

I have decided to take up my rights but past experience has proved me to be the world's worst investor.

In passing, just wanted to say I bought £3000 of BG in a single Co PEP
when these were available and now that investment is worth quite a bit more. Otherwise, like you, I am not the best stockpicker; buying a few Lloyds TSB without doing any research:cool:

monkeyspanner

Lloyds Banking Group (LLOY.L) trading now at 54.26p
Lloyds Nil Paid Rights (LBGN.L) trading now at 17.26p

So if you don't want to take up the rights issue you can sell them for approximately 23p for each share you hold (1.34 x 17.25p).

Alternatively you could sell a proportion of the rights in order to pay for the balance. If my calculation is right selling about 61.6% of the rights at this price would finance the purchase of the balance of 38.5% of the rights. This would effectively increase your holding by about 50%.

As the price of the Nil Paid Rights was about 24p when they were first available and they have fallen to 17.25p since I guess this reflects an expectation that people will not be falling over each other to take up the issue.

The irritating thing about this is that LBG directors thought the takeover of HBOS was a great deal even though they admiited they had not carried out the normal amount of due diligence. Would that due diligence have discovered the massive bail out loan that the Bank of England provided HBOS in the weeks prior to the take over and which has only just made public.

Flwriter

If my local branch of Lloyds TSB is anything to go by, I would say they're going nowhere fast.