Goldman Sachs and UBS bankers said Britain could not have sold the Royal Mail postal service at its current higher price, rejecting accusations that one of the biggest privatisations in years had short-changed taxpayers.
Reuters reports that the two banks, which led Royal Mail's London stock market listing, were summoned before a parliamentary committee on Wednesday to explain why they had priced the near 500-year old firm so far below its current market value.
Royal Mail's shares have rocketed by as much as 80% since Britain sold a 60% stake in October for $5.33 per share, sparking criticism from unions and opposition lawmakers that the banks set the sale price too low.
Adrian Bailey, chairman of the Business Innovation and Skills committee and a member of the opposition Labour party, criticised the Royal Mail sale price.
'It is possible that the government has lost over $1.6bn worth of revenue for taxpayers at a time of great austerity', he told Reuters after the hearing.
Richard Cormack, co-head of equity capital markets at Goldman Sachs said feedback from potential investors on what they were prepared to pay and the large stake on offer were among factors that had determined the price.
UBS banker James Robertson agreed. 'The current price is not reflective of what we could have sold 600m shares for', Robertson told the committee. Varying views of risks facing Royal Mail, such as its lack of proven profitability, led to differing valuations by a number of banks, he said.
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