How to sell bank shares?

  So Afraid 09:28 01 May 2008

My wife has decided to sell her free bank shares she was given a few years back,the bank has its own system to sell shares,but would going to a stockbroker be a better option.

  johndrew 09:38 01 May 2008

Both a broker and the bank are very likely to charge for selling the shares. Generally there is a fixed rate up to a specific value and a percentage thereafter.

To find out what it would cost, I suggest you `phone the bank and a stockbroker and ask.

Some information:
click here
click here
click here
click here

  Grey Goo 09:51 01 May 2008

Unless you need the money it may be advisable to hold as most bank shares are at a low at the moment.

  So Afraid 11:36 01 May 2008

Thanks for the links johndrew,

Grey Goo

No she does not need the money but with some banks offering rights issue`s,she would not take them up and therefore her holding,if i understand it,would be worth a lot less.She is only one of the few million people who recieved bank shares that way,so is not in the Roman Abramavitch league yet lol,but the shares as you say have dropped a lot in price.

  wee eddie 12:02 01 May 2008

Taking up the Rights Issue and then selling those you don't want.

This is not advice ~ Just an idea.

  oresome 14:15 01 May 2008

When a company wants to raise capital, it can do so with a rights issue, whereby it offers existing shareholders the right to purchase further shares in the company at a discount to the current price.

Because of this discount, the right has a value and a shareholder who doesn't wish to take up the offer will be able to sell the right and still retain the existing shares.

There will of course be more shares in circulation after the rights issue, but it can be argued that the value of the company will have increased by the money raised and therefore there has been no dilution of an existing shares value apart from the money returned for the right.

This is not advise, just my understanding of the rights issue mechanism which RBS and now HBOS are going through.

  So Afraid 14:48 01 May 2008

Thanks again for the reply,i will not take it as advice,but as helpful opinion`s

  johndrew 14:54 01 May 2008

Under normal circumstances I would agree with you. However, If you look at the value of shares in the banking sector over the past few months I think you would be hard pushed to see one that has not suffered a fairly sharp reduction.

A rights issue will raise capital but what will this be used for - I have seen little to advise me on this. My guess is that monies raised will be used to help the liquidity situation which has been strained as a result of (in my opinion) poor banking practice; this probably as a result of those looking for large bonus payments rather than a concern for their employer.

I feel it likely the rights issues will not be particularly well subscribed and the underwriters may well take a hit.

As for the value of shares, I think they will be somewhat unstable until the full extent of risk is exposed. Currently there seems to be an unwillingness for this to happen maybe because the banks are either nervous of market reaction or they simply are in such a mess they don`t know.

If I currently held shares in the big banks - I have some in smaller banks - I would sit tight. The major damage appears to have been done and as the murk clears it is likely there will be a bit of a recovery. Whether this will be to original levels in the near future I doubt. Any rights issue is not likely to affect current values greatly unless the banks decide to `gamble` again and any board that allowed that would find itself in deep water with shareholders; especially the larger ones.

  So Afraid 15:10 01 May 2008

If you had say 1000 shares with HBOS and they offer 2 new shares for every five you hold,but decline the offer,will the 1000 become almost half,or am i barking up the wrong tree.

  oresome 16:29 01 May 2008

Try this site for more info on the HBOS rights issue.

click here

  johndrew 17:11 01 May 2008

With a rights issue it is new shares that are offered for sale and existing shareholders are offered them, generally, at a discounted rate - but not hugely so. The value of existing shares really shouldn`t change as it is new capital being injected into the business. However see my opinion above.

The offer will not affect the number of shares you have. Only if they do as Eurotunnel has done recently (a reduction in the number of shares to increase the value of each) or as BAES did some years ago (an increase in the number of shares to decrease their market value) will the number you hold change.

What they may do is offer you 1 (or more) shares for each you hold at a discounted rate. If you take this offer up you will end up with those you have now plus the number you decide to buy. The value of those shares will be the number you have times the market value, i.e. as it is now. I should add that often the `discount` is free trading on those you buy.

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