We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Buybacks and incentive schemes both cost the bank, and therefore shareholders money.
If you don't do buybacks you get dilution from the additional shares issued each year costing shareholders money.
If buybacks are going to work that must be carried out continuously with a greater number than those issued each year.
A progressive dividend policy and a falling shares in issue would stimulate SP growth.
I personally would love to see 20 Billion shares bought back ( over time) and destroyed.
"Fleccy, Lti would argue black was white, but he has always been a staunch supporter of buy backs and continually argues in support of them. Personally, I agree with you, buy backs are futile in Lloys case and a source of irritation for a lot of shareholders."
I'm not against the share buybacks, as they prevent dilution; What I don't agree with, is the pantomine of dressing the buybacks up as enhancing shareholder value, while cutting dividends. It's a case of issue new shares to give yourself a bonus, then enhance your bonus by increasing the share price with buybacks.
As I said, I wouldn't be bothered if the Dividend isn't facing a cut from 2018 levels, which is what forecasts are suggesting. Describing the restarting of dividends as progressive, is doubly insulting if it's restarted 37.5% lower than the 2018 dividend, and looking at being lower for years to come.
Fleccy, Lti would argue black was white, but he has always been a staunch supporter of buy backs and continually argues in support of them. Personally, I agree with you, buy backs are futile in Lloys case and a source of irritation for a lot of shareholders.
"Or to put it another way, the share buyback is paying for the staff incentive share schemes........ not going to investors.
The number of shares does not go down and drive up the share price which is the perceived aim of buybacks in returning money to shareholders (Aviva being a good example at the moment).
Of course the number of shares would be higher without it, but the reality is that it is paying staff incentives."
Exactly my point, for some reason LTI argued against it.
Or to put it another way, the share buyback is paying for the staff incentive share schemes........ not going to investors.
The number of shares does not go down and drive up the share price which is the perceived aim of buybacks in returning money to shareholders (Aviva being a good example at the moment).
Of course the number of shares would be higher without it, but the reality is that it is paying staff incentives.....
"fleccy
the number of shares increases because of staff rewards etc
the number of shares decreases when buybacks occur
where am I going wrong?"
You're correct, the buybacks are avoiding dilution due to the issuance of shares for discounted share schemes. LTI is correct in what he says, but his answers miss the point that share buybacks are normally aimed at reducing shares in a company, whereas in Lloyds case the share buybacks are like refilling a bucket with a small hole in the bottom.
fleccy
the number of shares increases because of staff rewards etc
the number of shares decreases when buybacks occur
where am I going wrong?
F
Company A
Company L
So a company spends two billion compared to another companies one billion and so ends up with less shares on the market than the company only spending 1 billion.
You are a genius.
F
The SIMPLE truth has been told - if you cannot see it you have a problem.
If the buybacks hadn't taken place there would be 3.465 Billion MORE shares on the register.
END OF
You can't force someone to see the truth, just like you can't force a blind man to see.
F
'''ll put it another way.''
Please don't - heard it all before from a previous 2 dozen people.
How many more times. Buybacks have NOTHING to do with share schemes.
If the buybacks hadn't taken place there would be 3.465 Billion MORE shares on the register.
END OF
I'll put it another way.
You have two companies:
Company A buys shares on the market, with a share price of £1, for share schemes and bonus plans. They then anounce a Share Buyback of £1 Billion, and reduce their shares in issue by 1 Billion shares. If they previouls had 10 Billion shares in issue, this is now reduced to 9 Billion shares in issue.
Company L, instead of buying shares and placing them in treasury, for sharesave schemes, bonus plans, etc, issues new stock to satisfy their discounted schemes.
Company L increase their shares in issue by 900 million, lets say. To keep the figures simple, lets say company L's shares are also £1 and they originally had 10 billion shares in issue, increasing to 10.9 Billion after dilution due to share issuance. They then anounce a buyback for £1 Billion, and reduce their shares in issue to 9.9 Billion, and therefore have 0.9 Billion more shares in issue than Company A.
My point is Company A might have spent twice as much money on shares, than company L, but their share buyback is considerably more significant and meaningful than Company L's, who have only more or less stayed static.
Company A has therefore reduced it shares in issue, which means the shares will acrue in value relatively, unlike company L who hasn't really reduced the shares in issue.
f
''2.5 Billion more shares as if the buybacks hadn't taken place''
no sense in that statement i'm afraid.
If the buybacks hadn't taken place there would be 3.465 Billion MORE shares on the register.
You must have missed the posts from the previous 2 dozen people (also going in circles)
"In total 3.465 Billion less shares are on the register than if the buybacks hadn't taken place."
And 2.5 Billion more shares as if the buybacks hadn't taken place.
F
You have started to go in circles just as the previous 2 dozen people did.
Buyback has NOTHING to do with share based schemes/remuneration for staff.
In total 3.465 Billion less shares are on the register than if the buybacks hadn't taken place.
"So just 969,447,920 shares less than in April 2018, where did the other 2.5 Billion shares go?"
Basically it's a zero sum game, with the shares in issue remaining around 70 Billion, irrespective of share buybacks.
"The 2018 buyback means that there are 1.578 Billions shares less shares on the register than there would be now.
The 2019 buyback means that there are 1.887 Billions shares less shares on the register than there would be now.
So in total 3.465 Billion less shares than there would otherwise be now."
And yet the nuber of shares in issue April 2018 was:
"
As at 30 April 2018, the total number of shares issued by Lloyds Banking Group plc with rights to vote which are exercisable in all circumstances at general meetings is 71,992,041,055 ordinary shares of 10p each, which includes shares represented by American Depositary Receipts. No shares are held in treasury.."
https://www.lse.co.uk/rns/LLOY/total-voting-rights-k93oa24qchna7nz.html
And currently:
"As at 31 December 2021, the total number of shares issued by Lloyds Banking Group plc with rights to vote which are exercisable in all circumstances at general meetings is 71,022,593,135 ordinary shares of 10p each, which includes shares represented by American Depositary Receipts. No shares are held in treasury."
https://www.lse.co.uk/rns/LLOY/total-voting-rights-r0w2wv6nwdd17uu.html
So just 969,447,920 shares less than in April 2018, where did the other 2.5 Billion shares go?
TFE
A daily rns as you know is produced for each day of a buyback saying how many shares purchased and the average price. A simple calculation in a spreadsheet using these figures will give you the cost.
TFE
at a cost of about £2.09 Billion
Yes, the number of issued share reduction is not in doubt, they must declare the number of issued shares. I just mentioned the o/a costs involved as Lloyds did not declare them.
Although it's probably buried somewhere in an issued report.
F
As I pointed out earlier - an employee who was in a 3 or 5 year SAYE (where they pay for their shares), if that had any common sense would have cancelled their savings and purchased shares in the market instead at low levels.
TFE
The 2018 buyback means that there are 1.578 Billions shares less shares on the register than there would be now.
The 2019 buyback means that there are 1.887 Billions shares less shares on the register than there would be now.
So in total 3.465 Billion less shares than there would otherwise be now.
"Trying to work out the number of issued share reductions by a given sum is impossible not only by the SP variation over time spent but also, last time Lloyds refused to discuss and more importantly refused to disclose the charges incurred for conducting the buyback."
I was about to log out, but then i thought. why were Lloyds issuing shares for sharesave's and Bonus plans anyway, when shareholders were being denied a dividend. You'd think that any such schemes would be suspended too, sharing the pain and all that.
Trying to work out the number of issued share reductions by a given sum is impossible not only by the SP variation over time spent but also, last time Lloyds refused to discuss and more importantly refused to disclose the charges incurred for conducting the buyback. They maybe Lloyds shares but it's not actually LBG selling them.
Just saying.
F
''but the buyback is meaningless ''
It is not meaningless - a buyback will take X amount of shares off of the share register