Last week Woolwich chief executive John Stewart indicated that he will hand back excess capital to its new shareholders early next year.
Last year, in explaining the "fundamental rationale for conversion", Woolwich stated as its first reason that "Woolwich would have access to additional equity capital, providing greater flexibility to fund business expansion and development."
However, Woolwich simply does not need extra capital, analysts say. They calculate that it carries around pounds 850m in surplus capital, an amount equivalent to about 50p for each Woolwich share.
"It's not necessarily a contradiction and circumstances can change," said David Blake, Woolwich head of corporate communication. "It was only one reason we gave for conversion, and there were others, such as the greater regulatory flexibility we will have as a bank."
Woolwich shares start trading tomorrow morning amid great uncertainty over their likely price next week.
In the earlier Alliance & Leicester and Halifax flotations, stockmarket trading began after institutions bid for the shares that members wanted to sell. The sellers received the average price set at auction.
Woolwich shares will initially begin trading on the stockmarket. BZW will then conduct four daily auctions of the 370 million shares Woolwich members are selling.
This opens up the possibility, say analysts, that selling shareholders will receive less through the auction than if they had opted to sell first thing tomorrow by going direct to a broker. BZW's Lesley Johnson reckons this is unlikely.
However, there is a big gap between the price shown on the IG Index betting market and the value of Woolwich indicated by analysts.
Woolwich was quoted by IG last week at about 320p a share, valuing the new bank at pounds 5.1bn. The windfall received by Woolwich members receiving the minimum 450 free shares would be pounds 1,440 each.
But SGB Warburg has valued Woolwich at just 260p a share, assuming the shares sell for a multiple of 13 times expected 1997 earnings.Reuse content