Bid for A&L could cost directors dear

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The Independent Online

Alliance & Leicester's executive directors would lose out on millions of pounds in share options if the bank was sold to Banco Santander of Spain at the current share price.

Santander, which owns Abbey in the UK, held talks with Alliance & Leicester last month but discussions broke down over price. Spain's biggest bank is said to have offered less than 700p a share.

The 2006 annual report showed that David Bennett, A&L's chief executive, had 253,447 options at an average strike price of 874p, worth a potential 2.2m. Mr Bennett was finance director at the time, and is likely to be entitled to more options after his promotion.

Chris Rhodes, the finance director, had 297,664 options with an average price of 852p, giving him a potential 2.5m. The 228,852 options of Richard Banks, the head of commercial banking, had an average price of 870p, making them worth a possible 1.99m. Simon Maughan, an analyst at MF Global Securities, said: "In order for these guys to make proper money to personally benefit from a sale, Santander needs to start at 9 and work upwards."

A&L has been a potential acquisition target since the former building society demutualised in 1997. The bank has said regularly that it takes decisions in the interests of all shareholders.

A&L's shares jumped more than 8 per cent in early trading yesterday but closed at 758p, up just 4p, as investors questioned whether Santander would come back with a higher offer.