Alliance & Leicester shares drop 3.2 per cent

Shares in Alliance & Leicester have dropped yesterday as hopes of a counter-bid to Santander’s £1.3bn offer faded. A&L shares dropped 3.2 percent to 324.5p; this is just 5 per cent higher than the 308p value of Santander’s bid.

Many analysts had said that a rival bid to better the offer was unlikely to emerge, as many competitors did not have the kind of capital that Santander has.

Yesterday was a grim day all around for bank shares; Citi analysts had warned that the Alliance & Leicester deal will not be enough to change the mood about the sector’s valuation.

If the deal between A&L and Santander does go ahead, then all of the shares that the four executive directors have will not be available to them. David Bennett, the chief executive, has 236,000 such shares however, the remuneration committee has discretion to award some of the shares amassed in a separate performance plan, under which Mr Bennett has 89,777 shares.

If the director’s contacts are terminated as a result of change of control, then they will be entitled to a year’s salary and pension plus a year’s life and medical insurance cover.

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