Lloyds Bank public share offer is announced - is it worth investing?
Why does the government own Lloyds Bank shares?
In 2008 the government saved Lloyds Bank from collapse at the height of the financial crisis with a £20.5bn bailout which equated to a 43% stake in the company. The Treasury has already recouped almost three-quarters of the public funds used by selling shares to institutional investors. Now the Government will allow the general public to buy Lloyds shares from them via the Lloyds share public offer. The proceeds from this sale will go toward reducing government debt.
What are the details of Lloyds Bank share sale?
- sale will be launched in spring 2016 (exact date to be confirmed)
- applications to buy Lloyds shares will be available online and by post
- members of the public will get a 5% discount to the share price
- small investors seeking to buy less than £1,000 of Lloyds shares will get priority
- if the purchased Lloyds shares are held for a minimum of 12 months investors will get a bonus of 1 share for every 10 they own
- the value of the bonus shares will be capped at £200 which means bonus shares will only be granted on the first £2,000 invested
Should you buy Lloyds Shares - are they a good buy?
Investing in individual company shares can be risky as you are relying on one company's performance over a period of time. Shares can go down in value as well as up and, as we saw in 2008, could even end up worthless. However, with the share price discount of 5%, promise of bonus shares, and the prospect of a decent annual dividend, this investment opportunity is bound to prove popular. In addition some analysts are suggesting that the share price has been suppressed by the previous drip selling by the Government as it tried to reduce its stake in Lloyds. This public float brings an end to the Government's aggressive selling which could be positive for Lloyds' share price and those who buy in.
Because demand for the Lloyds shares is going to be large it's advisable to register to receive an email notification when the official date for the share sale is announced, even if you are undecided whether you will take part. Details of how to register are given below.
How to buy Lloyds Shares from the Government
To keep updated about the Lloyds public share sale, you can register your email* with Hargreaves Lansdown, a reputable and personally trusted stockbroker. They will notify you immediately when the Lloyds public share sale date is announced.
While we wait for the date to be announced, it is worth joining the MoneytotheMasses ‘Become a better DIY investor in minutes’ email course to find out how you can improve your investment skills in just 10 short emails.