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MPs blast banks for ‘failing taxpayers’ over Royal Mail valuation

UBS and Goldman Sachs defend their valuation of Royal Mail last month.

Royal Mail

MPs have hit out at Goldman Sachs and UBS for “failing taxpayers” with their valuation of Royal Mail last month.

The banks were paid £13m to act as the Government’s key advisers for the sale, and valued Royal Mail at 330p per share.

The share price rocketed 38 per cent on the first day of trading, the biggest increase in UK history, and has been consistently more than 500p. 

Business secretary Vince Cable said the increase was “froth” but investment analyst Panmure Gordon disagrees and values the shares at 570p.

Speaking to the Business, Innovation and Skills committee last week, UBS and Goldman Sachs denied they undervalued Royal Mail.

They said the privatisation was “uniquely challenging” and “well-executed”.

The banks said the key downside risks to the valuation were the threat of industrial action and a US default during debt negotiations.

Conservative MP for Northampton South Brian Binley accused the banks of “failing taxpayers” over the valuation.

He said: “The taxpayer has the right to think that, for all the money you were paid, you were not very clever at your job.

“From a lay person’s point of view it appears you were misled by the companies you consulted or, having consulted them, you misled the Government.”

BIS select committee chair Adrian Bailey said the banks were “misled” by potential investors they consulted prior to the float.

Worldwide Financial Planning IFA Nick McBreen says: “The Government undersold it. It is always the case with privatisations that they are never a good deal for taxpayers.”

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