I have shares in both HBOS and Barclays Bank plc. Both are offering shares under Rights Issue. Is it worth it?

Question

Should I take up the offers?

I am being offered 49 Barclays shares at £2.82 each and 74 HBOS shares at £2.75 each.

PS. I'm in the UK.

Answer 1

At the moment, the prices of HBOS and Barclays Bank plc Right Issue at the Stock Market are around the Rights offer price. You are offered 49 Barclays Rights and 74 HBOS Rights which are odd lots. If you want to sell odd lots later you may have to sell ar a lower price for odd lots in the stock market.

Answer 2

Check their market prices before you do anything - HBOS were trading below 275 earlier this week - they bounced back today, but the rights issue isn't the obvious bargain it was when announced...

Answer 3

Barclays isn't a rights issue, it is an open offer.

HBOS share price is under the issue price at the moment, isn't it?

These are such small amounts it is not worth worrying about. If you have the cash go for it (if the share price is higher at the time of acceptance)

The alternative would be to buy the same number of shares in the market but the dealing costs would make it not worth while.

The other point is if you lapse these issues (do nothing) then HBOS will pay out the lapsed proceeds (if any) but Barclays will not.This is the difference between a rights issue and an open offer. Again, in your case this is irrelevent because of the amount.

Answer 4

Unfortunately the financials especially, European, have not fully taken write offs as of yet.  I would hesitate to put more money into "falling knives" e.g. financial stocks....

Answer 5

If you have confident in the shares,

you should take the shares offer as the price of the shares would drop by the offer prices if other factors remain constant. (i.e. Barclays shares will drop 2.82 and HBOS will drop 2.75.)