Alliance shares retreat but auction price rises

The price of Alliance & Leicester shares fell 23.3p to 533p yesterday, but the average price paid in the second auction of unwanted shares on Monday rose to 551p, up 29p on the price in the first auction last Friday. After the first two auctions the running average price received is 536p, with the result of the final auction, which took place last night, to come.

The top bid in the second auction was 575p, and the lowest 534p, but unlike the first auction when only 36 bids were received there were 147 separate bids - the largest for 8.5 million shares at 568p.

Cazenove, broker to the share issue, declined to reveal whether lower bids were received but did confirm that all the 52.3 million shares in the second auction were sold.

The 640,000 investors who decided to sell their shares at auction will know this morning the average of all three auction prices which will determine the price they receive.

The result of the third auction will give the new bank a clearer idea of whether any significant stakes have been accumulated, which could indicate the early presence of a potential bidder.

Although institutions were free to make multiple bids at different prices at auction, there is no clear evidence that the shares sold so far have fallen into the hands of a single determined buyer.

Excluding the 52 million shares from the auction, the number of A&L shares traded yesterday fell to around 7 million, although this included many thousands of small deals.

The experience of Alliance & Leicester will be closely studied by Halifax, Northern Rock, Woolwich, and the insurer Norwich Union, which have yet to decide whether to follow suit and allow small shareholders to pre-sell allocations when they float on the stock market later this year.

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