I am finding the market instability quite exciting at the moment. Lehman’s going bust over the weekend, and now AIG being bailed out in the US. Wow.
As a long time investor in HBOS I keep a keen eye on their share price and over the last couple of days they have been all over the place, after dropping like a stone yesterday they were up an down like a whore’s drawers today, lol! It got to the point where they were down to £1!!!
I couldn’t believe it, and the FSA issued a statement saying HBOS was fundamentally sound and there was no reason for the depressed price. I was desperate to snap some up at £1, but III (who are owned by HBOS incidentally) weren’t taking any orders so I had to go through Hargreaves Lansdown. By the time I executed, the price had crept up but there was a large bid/offer spread and I ended up getting a load @ £1.45. Not as cheap as I’d hoped but still cheap.
The price kept heading north and was at £2 when all of a sudden there was a rumour going round that LloydsTSB were in discussions with HBOS about a takeover! Then the BBC confirms it some time later. It seems that due to the depressed share price, a lot of big financial institutions started pulling their money out of HBOS as they were worried about the financial stability of the company, and the government stepped in to persuade LTSB to do a deal so as to prevent another Northern Rock style run on the bank. This is incredible because it will create a huge financial company and the competition commission would normally block this kind of deal – however, the government are actually overruling the competition commission in this case and attempting to force the deal through anyway, they are THAT desperate to avoid another run on a UK bank.
Robert Peston at the BBC reckons they are worth about £2.80 a share if the LTSB takeover goes through, which should translate into about £1K profit for me. That’s not exactly a real profit as I still have some shares I paid over £10 for, so it will just help me cover my losses on those. The exact terms are expected at around 7am tomorrow morning.
Tomorrow’s trading should be very interesting to say the least!