Banks quizzed on Royal Mail sale

Bosses from six banks will appear before the Business Select Committee in Parliament today as controversy over the Royal Mail sale continues. Unions claim the taxpayer has lost hundreds of millions of pounds due to an undervaluation.

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Royal Mail shares at 550p compared to initial 330p

Royal Mail shares were prices at 550p each yesterday, up two thirds from the initial value. Credit: PA

Goldman Sachs and UBS were the investment banks that ran Royal Mail's flotation last month, while JP Morgan, Citibank and Deutsche Bank missed out on running the share sale, while broker Panmure Gordon attacked what it said was the undervaluation of Royal Mail.

The share price was set at 330p, valuing Royal Mail at £3.3 billion, but the shares jumped by over a third on the first day of trading, and broke through the 500p mark within a week.

The share price yesterday stood at more than 550p.

The CWU said this means the Government undervalued the company by more than £2 billion.


Union: Withhold payment to banks who advised Govt

The Communication Workers Union (CWU) said any further payments should be withheld on the basis that banks undervalued the company.

General secretary Billy Hayes said:

Hundreds of millions of pounds of taxpayers' money have been lost because of the failure of the Government and its advisers to accurately value the company.

In other situations this would be gross incompetence or even theft. Private shareholders have lined their pockets at the expense of the taxpayer following the huge leap in the share price.

At the very least the institutions which advised the Government should not receive any further payments - which are discretionary.

Serious consideration should be given to claiming back fees paid for shoddy advice which has left the client - the taxpayer - out of pocket.

It's time to see whose side the Government is really on. Will they back their buddies in the city or stand up for the taxpayer and attempt to salvage some value for money from this debacle?

– Billy Hayes, CWU

MPs to grill bank bosses over Royal Mail sell-off advice

Royal Mail shares from private investors were up to seven times over-subscribed. Credit: PA

The Government has been urged to withhold any more payments to banks which advised it on its controversial privatisation of the Royal Mail amid continuing complaints that the taxpayer has lost hundreds of millions of pounds over the sell off.

The sale will come under the spotlight again today when MPs question bankers who provided valuations of the company before the flotation.

Those due to appear are John Mayne, JP Morgan; Ben Store, Citibank; Gert Zonneveld, Panmure Gordon; James Agnew, Deutsche Bank; James Robertson, UBS and Richard Cormack, Goldman Sachs.

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