Lloyd’s Bank Preferential Shares

typistretired

Received letter today from Equiniti offering to buy my Lloyd’s Bank Preferential shares at 112.050% wondering if this considered a good offer by the more saffy shareholders on here?

Thrugelmir

The offer is around market price. An easy cost free means of exiting the holding if you so wished. 

uknick

If you sold would you be able to get equivalent the annual income elsewhere?  Mine are returning about 7% per year ignoring any capital growth.

wmb194

*preference. If you've been offered 112.05p then they must be the 6.475% Non-Cumulative Preference Shares*, LSE:LLPE. The thing to bear in mind with these is that they are redeemable at par, 100p, if Lloyds chooses on 15/09/24 so they might only have a few years left in them anyway. It's whether you effectively take the next year's dividend now and reinvest in something else or just continue holding.

*IIRC these were originally issued by Halifax in 1999 when it bought Birmingham Midshires and these were given to BM's members as compensation, 400 per member.

Thrugelmir

uknick said:

If you sold would you be able to get equivalent the annual income elsewhere?  Mine are returning about 7% per year ignoring any capital growth.

On redemption you'll only receive nominal value. Any market premium will dissipate.

uknick

Thrugelmir said:

uknick said:

If you sold would you be able to get equivalent the annual income elsewhere?  Mine are returning about 7% per year ignoring any capital growth.

On redemption you'll only receive nominal value. Any market premium will dissipate.

True, if Lloyds cancel them, despite them saying they won't.  Maybe, it is time to take the offer.  Of course with my luck and poor judgement, whatever way I go everybody else should do the opposite 

Thrugelmir

uknick said:

Thrugelmir said:

uknick said:

If you sold would you be able to get equivalent the annual income elsewhere?  Mine are returning about 7% per year ignoring any capital growth.

On redemption you'll only receive nominal value. Any market premium will dissipate.

True, if Lloyds cancel them, despite them saying they won't.  Maybe, it is time to take the offer.  Of course with my luck and poor judgement, whatever way I go everybody else should do the opposite 

Seems that the 6.475% preference shares will be redeened in 2024 in any event. LLoyds are merely accelerating the process. Most likely as they've spare capital to utilise at the current time. Also the share registrars charge for their services. Removing a large number of small individual stock holders will pay for itself in terms of a reduced administrative charge for LLoyds. 

Edi81

These probably no longer count as 
capital these days so LBG wants rid of them now. 

RAFFLES

I have 400 of the 6.475% shares.
They have been paying a dividend of £12.95 twice a year, so a total of £25.80 per year.
If they are offering  £1.12 per share that equals £448

if I continue to hold until 2024, then that will mean that I get £1 for them plus at least another £51.60 (2 years dividends) totalling £451.60. Unless I get 3 years dividends which would mean £477.40

I am no expert, and have probably got this wrong?

wmb194

uknick said:

Thrugelmir said:

uknick said:

If you sold would you be able to get equivalent the annual income elsewhere?  Mine are returning about 7% per year ignoring any capital growth.

On redemption you'll only receive nominal value. Any market premium will dissipate.

True, if Lloyds cancel them, despite them saying they won't.  Maybe, it is time to take the offer.  Of course with my luck and poor judgement, whatever way I go everybody else should do the opposite 

Which ones do you own? Some are redeemable whilst some are irredeemable. LLPE, the one we've been talking about, is redeemable. LLPC 9.25% and LLPD 9.75%, the two others commonly held by retail investors, are, short of shenanigans of the type Aviva tried with its preferences shares a few years ago, irredeemable.

wmb194

RAFFLES said:

I have 400 of the 6.475% shares.
They have been paying a dividend of £12.95 twice a year, so a total of £25.80 per year.
If they are offering  £1.12 per share that equals £448

if I continue to hold until 2024, then that will mean that I get £1 for them plus at least another £51.60 (2 years dividends) totalling £451.60. Unless I get 3 years dividends which would mean £477.40

I am no expert, and have probably got this wrong?

Its ex-dividend dates look to be in February and August so your £477 calculation appears to be about correct, with dividends for 2022, 23 and 24. If you're lucky inflation and concomitantly borrowing costs will have rocketed by then and 6.475% will begin to look cheap to Lloyds.