Questor share tip: Lloyds Banking Group shares will recover over time However, it's not all doom and gloom for the bank 40pc owned by the taxpayer. There are likely to be earnings upgrades as Lloyds is only transferring £24bn of assets with the deal, compared with a previous indication of just under £70bn. The transaction meets all regulatory requirements, so the move can be regarded as another step in the rehabilitation of the bank. Lloyds is back paying a small dividend, but the yield, at 0.3pc, is hardly exciting. Earnings are expected to rise over the next few years, with the current forward earnings multiple of 11.6 falling to 6.6 in 2013 and 5.3 in 2014. This is, by historic standards, very cheap. But the shares are cheap for a reason. The City is split on whether to buy the shares. Of the analysts monitored by Bloomberg, 16 say buy, 10 say hold and six say sell. However, the average price target is 39¾p, one-third above the current price. There is substantial long-term value here. The banking sector will continue to be roiled by events. These will come in the form of regulatory pressure, bad debts and issues relating to sovereign debt. Questor thinks the banks" share prices will recover substantially - but it will take many years. David Cameron told The Telegraph last week that austerity could last until 2020. These are the time scales you are looking at in the banking sector, too. Investors who want to buy the shares should tuck them away and forget about them - with time, gains could be substantial. But the short-term view is hold.