Shareholders of both Lloyds and HBOS who have not consolidated their shareholdings of Lloyds shares post-takeover will lose out again.
You would have thought that the company, and Equiniti (the registrar), would want to minimise the cost of administering its large shareholder register. Apparently not; instead of searching out duplicate names and payment details on the register it is happy to let shareholders run two separate accounts. The reason is obvious - Equiniti presumably gets paid according to the number of names on the register and Lloyds gets the benefit of all the rounding down of entitlement calculations.
Shareholders in such a situation may have already lost a free share from the recent capitalisation issue of 1 new share for every 40 held. For example if you held 500 original Lloyds shares and then received 310 share in Lloyds in exchange for your HBOS shares you had 810 Lloyds shares in total. After the recent capitalisation issue you now have 512 + 317= 829 shares instead of 830 had your holdings been merged.
The current offer of 1 new share @38.43p based on 0.6213 shares for each existing share means you lose out again.
Our hypothetical 829 shares give us the chance to acquire 515 shares. However, split shareholders are offered fewer. Our 512 shares entitle us to buy 318 new shares and the remaining 317 shares means we can apply for 196 new shares. Net result - we can only get 514 new shares.
The application does give the shareholder the mechanism to combine and consolidate accounts for future issues but in this instance the total that can be applied for is the sum of the individual entitlement totals on each form.
Can anything be done?
I intend in my consolidation covering letter to apply for my extra share that I would have been entitled to had the consolidation of holdings occurred earlier.
I shall therefore send in a cheque for the amount on the forms plus an extra 38p for this lost share. I will also add a further 101p to this cheque to ensure that I get a refund of the overpayment - amounts for less than 100p are being retained for the benefit of the company.
Whether or not I get the share that is rightly mine is only part of the grievance. If it causes more stress and cost for Lloyds Bank then it will be a reminder for them that the acquisition of HBOS was the most obvious "no deal" of the bank's 300 year existence. This deal has caused stress for all its small shareholders who were incapable of outvoting the large investment fund managers. The latter are so closely associated to the investment banking salary gravy train that they struggle to think for themselves.
As for Equiniti, there will be even more rumblings of dissatisfaction among shareholders required to use this company's service once this administrative overload hits them.
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