LLOY - Share buyback 2019



Hi Mac, I am going to disagree with you for the second time today.

PPI was a massive rip-off of the unwary and the unsophisticated. People on modest incomes worry about debt, redundancy and homelessness much more acutely than professionals like us. I would have thought that you never entered a PPI contract. I never did as I have always considered that on modest risks such as losing my job I could, effectively, self insure. Same thought process on extended warranties too.

I think I read recently in an Old Eyes post a quote from a banking manager who said “it ain’t a loan unless its got PPI attached to it”.

These policies were sold willy nilly to customers whether or not they ran much risk and they were also sold to people who would never be able to claim on the policies such as the self-employed.

Further, the premium to payout ratios on PPI were found to be extremely high. A hallmark of rip-off insurance.

So, yes I disagree with you. The policies were a complete rip-off primarily designed to deprive customers who did not understand what they were buying of their money…massively disproportionately.

When we are talking about our banking institutions, I think that customers should be able to expect fair treatment backed up by adequate regulation. So, as a LLOY and RBS investor, I do not begrudge customers their compensation even if I have concerns about the methods of somebof the claims handling companies.


Frog in a tree


Which shares were those that were created for HMG? The bulk of the increase in the number of shares in issue came from the two Open Offers and one Rights Issue in 2008/2009. These shares were sold to investors, although the majority of the shares in one of the issues was taken up by the relevant underwriter (i.e. HMG) since the market price fell significantly below the offer price and hence few existing shareholders wanted to take up their allocation. LLOY received the capital raised in each case.

This period also covered the takeover of HBOS, which at the time had a market capitalisation greater then that of LLOY. If you are only concerned about the total number of shares in issue then this can be easily resolved by a consolidation, although this would have absolutely no effect on the eps/dps, or total asset value.

The net asset value per share went from 155p in 2008 to 68p in 2009, however, the total assets went from £436m to £1,027m

Using the dividend payout (plus the buyback allocation) to buyback shares would only reduce the number of shares in issue by about 9.5%, however, I suspect that this would result in a significant reduction in the sp.


Bowman, thank you for clarifying how HMG acquired their LLoyds stake.

From your discussions, it appears that you would prefer dividends rather than share back. However, this is not suitable for all investors.

I can understand this if your total dividends from all sources is less than £2,000 per year as no further tax is payable. However, I am subject to an additional 32.5% tax on the majority dividends and I try to avoid ex-dividend dates.

My previous comment was not clear enough on what Lloyds should do with its profits. However, please consider the following simile:
Buy a house to let with 75% mortgage resulting in small profit. Few years later take out additional mortgage for major improvements / extensions and use expensive credit cards for unforeseen expenses.
As rent rises, would you withdraw profits, over pay additional mortgage or reduce credit card debt?
Over time, I would reduce expensive credit card debt first, then additional mortgage and finally split regular profit for reducing existing mortgage and withdrawal for personal use.

Lloyds should repay its expensive debts first rather than dividends or buyback its additional financing from the rights issues.

I have a large long term holding in Lloyds that is partially held in my employer’s Trust schemes which periodically gets transferred to either my share ISA or Pension Scheme to avoid capital and dividend tax.

I have closed my CFD short term long trading positions with intention to buy on significant pull backs. However, this has not been active as much as I liked due to large unpredictable movement issues with Brexit. This can easily wipe out numerous day trading profits from either long or short positions going in wrong direction.


If this years buy back is a failure like it was 2018

I for one will not be indorsing any more and will be asking for a special dividend


This might be true if I had my income yielding stocks in a normal stockbroking account, but it is almost irrelevant to me since the majority of these stocks are inside an ISA. I use the majority of my funds outside of an ISA to be in growth stocks, and it is not that difficult to keep the actual dividend income close to the tax free limit.

Overall half my holdings (in numerical terms) are in income stocks (actual yield ~6%) and the other half in growth stocks (actual yield ~2.5%). The capital split is 60% income / 40% growth.

HMG do not have a stake in LLOY, it was disposed of some time ago. Their holding was anyway an investment not a loan and the HMG share was reduced to nil by HMG selling the shares on the open market. LLOY did not pay anything to HMG to effect this disposal.

I am unsure which debts you are referring to. LLOY have a wide range of debt instruments in issue, which do result in an effective interest charge. These debt instruments usually have a long maturity date, and the interest payable varies according to when they were issued. LLOY are continually repaying and reissuing these instruments, and the capital involved enables LLOY to continue making loans to their Customers. Many of the debt intruments have coupons or attached interest charges that are lower than what LLOY charge their Customers to use the related capital.

If the dividend payout were to be used to buyback debt, it would have a negligible effect on the interest paid.

I have given up using CFD’s for equity positions, since the commissions charged skew the P/L calculations and in many cases negate the potential benefits (at least in how I trade). I now use CFD’s solely for FTSE positions, which are usually small short-term trades. I am categorised as a “Retail” customer, so the smaller margin levels are not available to me, and this change (made last year) has affected how I trade. I was previously making about £30k p.a. from CFD’s (of which the vast majority was derived from index trades), which was a reasonable return on the £50k capital I was using. The margin changes have necessitated a significant increase in the capital required which slowed my trading recently whilst I extracted this extra capital from other sources.

I also have a fairly large holding in LLOY, with it accounting for about 4.2% of my Portfolio and being my third largest holding.


I am unsure if I would classify the 2018 buyback as a failure. It did achieve a 1.34% reduction in the number of shares in issue, which would have been larger if it were not for the bonus shares issued at the same time. The number of shares subsequently increased by 0.32% between the end of the 2018 buyback and the start of the 2019 buyback.

The current sp is only 0.7% lower now then the average price paid during the 2018 buyback, and this drop is more to do with local and global effects, which would have been there with or without the buyback.

Howeever, viewed as the return to shareholder, it does not seem to have been very effective.


Hi Bowman

I sure your right, and its good to read the above … as its does mean more Dividends to go around in 2019 and going forward

But we all have a personal targets and I honestly was expecting to see 73p in 2018 not 49p when I bought back in May time

Moving on Its a New Year now, so I hold a new fresh hope and all that :slight_smile:


You read that from me @frog_in_a_tree


Another 11.8m shares taken out of circulation today at an average of 62.09p. It is becoming a bit boring, with virtually the same amount being bought everyday; that is 7 days in a row within +/-2% of the average.

The overall average paid so far is 62.6p, and a fraction under 3% of the buyback monies have been used. Currently no change on the probable end of January 2020 finishing date.

I expect we could see some weakness over the next few days as the Brexit shenanigans come to a bit of a head, so maybe they will take the opportunity to up the repurchase levels.


Looks to me like daily trading volumes in LLOY are a still bit subdued for some reason, certainly below average? This in itself must restrict or have some impact on number of shares repurchased under the buyback on a daily basis?



Well that seems to have been a little way off the mark today, although this could still be the case after the vote tonight. I had not expected yesterday evening’s development, which saw the SP rise a fair bit initially. However, the discussions throughout the day seem to indicate little likelihood of the deal being accepted, hence the gradual drop off in the price.

Guess what! Today’s buyback (11.6m) has been maintained at the same average level, which makes 8 days in a row. The average paid (62.82p) reflects the higher levels this morning, but is not that much higher than the overall average paid so far.


I guess many of the large investors probably holding off buying until a bit more clarity re. Brexit.

Interesting price action yesterday, weak early then picked up later.
Managed to close 4 shorts and open and closed 6 longs.
Worked well for me.

Just put a bit more long on as it dropped again.




Today’s buyback volume (11.57m) is still within the 2% band around the 9 day average of 11.64m. It looks as if they are keeping a relatively constant buyback level, compared with the previous buyback that varied considerably.

Todays’s 62.4p average buyback price is within spitting distance of the overall 9 day average of 62.6p.


Hi Again @frog_in_a_tree, A little while ago you said you were interested in building a holding in TRIG. Well it seems that they are doing another money raising exercise and offering shares to existing holders (and potentially others) at the discounted price of 114 (116.4 today).

For details see here:-

See the first item in the RNS section entitled “Publication of a Prospectus and Circular 07 Mar 2019”.

Its easy for me to apply as the offer has come up as an extra line item in my portfolio to which I simply need to respond to. If you arent holding you will need to apply some other way, hopefully the details are in the link above.

ATB (and no guarantees obviously…but I am buying some more)



Slowly Slowly Catchee Monkey


Hi Pref,

Thanks for your message. I opened a position in TRIG last month so got the offer notification. I had a look but it seemed that you had to subscribe this financial year and as I have now used up my ISA allowance this year I can’t contribute any more cash. A pity but that how things go.


Frog in a tree


Hi Again @frog_in_a_tree, Yes not great timing for the offer is it, delaying to just after the new tax year started would likely have secured more funds you would have thought. Anyway I have some divi money that I have been collecting, not enough for me to buy anything normally (given stamp duty & commission effects) but given that those costs dont apply and a discount to boot then I thought Id use it to take up the offer.

LLOY doing well today…!!




Have done the same, Pref. A useful way to use up small amount of accumulated cash.
Glad you’re still with us - feared we could have lost you to Lemon Fool. I’m something of a “lurker” on here, but always read your posts with interest - and have you to thank for drawing attention to TRIG some time ago.


When Lloyds did this, we were scammed. I never joined or followed the joint action, did anyone ever get paid out?


Hi @pennyfarthing, Well I hope TRIG works out well for you, been good to me so far - but no guarantees as always.

I have no plans to stop posting here, not got used to the LF as yet. It’s a very different place and atmosphere, which is good in some ways - certainly lots of switched on people, but they are quite fussy about what you post about and where.