Should I hold onto my Lloyds shares?

Q: I had a few Halifax shares that were transferred to Lloyds Banking Group (LLOY) in the recent merger. These now seem to be very low in value and I did not seem to get very many shares in the changeover.

Should I now regard them as being worth just a small amount and therefore hang on to them in the hope that at sometime in the future they may be worth more?

Philip Pearson is a partner at P&P Invest in Southampton.

A: More than seven million people received a windfall payment of shares when Halifax demutualised in 1997.

These shares, in turn, were exchanged for Lloyds shares when the companies merged. Unfortunately, Lloyds is in a terrible financial state, which is reflected in the share price: it has reduced by around 96% since reaching its peak in May 2002.

The total value of your holdings is likely to be very low and would provide little value if you were to sell the shares at this time. Unfortunately, the prospects for the bank are poor in the immediate future, but they could improve over the long term. If you are prepared to wait for at least 10 years, then you may see some improvement in the share price over this period.

To get a current valuation all you need to do is look up the share price and multiply this by the total holding you currently own.

Interested in investing in financial shares? Peter Temple's guide to analysing banks may come in handy...

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.