Woolwich members lose out in first share auction

Former Woolwich members who opted to cash in their windfall shares immediately look certain to raise much less than if they had asked for a share certificate and sold in the market on Monday.

The first auction that will determine how much they receive for their shares produced a disappointing average price on Monday night.

The first auction of unwanted Woolwich shares to pension funds and other institutional investors resulted in a lower-than-expected average price of 315.35p, well below the 373.5p the shares reached in first dealings.

The actual price immediate sellers will receive will be the average of Monday night's price and those achieved in three further sales this week.

The announcement of the price sent Woolwich shares sharply lower, dragging the rest of the previously high-flying banking sector down as well. Having fallen from their early high to Monday's close of 334p, the shares tumbled again yesterday to close at 301p.

Abbey National shares fell from 876.5p to 845.5p, while NatWest tumbled from 881p to 843.5p. Recent flotations fared better with Alliance & Leicester down just 0.5p to 613p and the Halifax 8p lower at 761.5p.

The poor showing by Woolwich yesterday was no surprise to analysts, who have warned that the shares are overpriced even by the standards of the banks sector, which has soared more than 35 per cent this year.

One analyst said: "We don't see any short-term support above about 270p, but having said that, bid rumours will persist."

Woolwich is widely seen as a likely bid target with its heavy exposure to the booming South-east housing market.

At 315p, the average windfall of 657 shares would be worth just over pounds 2,000.