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Lloyds' 2.8 million private shareholders have very little time to decide what to do about their rights issue.
The vote on the fundraiser takes place in Birmingham on Thursday and, depending on their view, small shareholders will need to make a decision within a week of that. They have four options:
1. Take up the rights. On the average holding of 740 shares, they are being offered 991 new ones at a total cost of £366.67.
2. Sell their rights to new shares on the stock market once trading in the nil-paid rights officially starts on Friday. In today's unofficial grey market, they began trading at 23¼p. Selling rights at that level should mean you get a cheque for about £230 shortly before Christmas.
3. Ignore either of these options, and Lloyds will sell your rights at the end of the offer period and send you a cheque. But nil-paid rights tend to lose their value toward the end of an offer so your cheque is likely to be smaller and could take longer to arrive.
4. Ask Lloyds to “tail swallow” for you. This means it sells enough nil-paid rights to fund as many new shares as you can afford to take up. It costs you no cash but you will get fewer new shares than your full allocation.
Lloyds has set up a free dealing service to handle options two and three for existing shareholders.
Richard Hunter at broker Hargreaves Lansdown said: “If you have £365-odd to invest in UK banks, would you choose Lloyds? For most people, the current market favourite is still Barclays, so their money would be better spent there.”
