MPs to quiz bankers over Royal Mail valuation row

LONDON Fri Nov 8, 2013 3:17pm GMT

Raindrops are seen on a Royal Mail post box in central London October 16, 2013. REUTERS/Stefan Wermuth

Raindrops are seen on a Royal Mail post box in central London October 16, 2013.

Credit: Reuters/Stefan Wermuth

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LONDON (Reuters) - British MPs investigating whether the sale of shares in the Royal Mail postal service was correctly valued have summoned bankers from across the City of London to give evidence, a government source said on Friday.

An 69 percent rise in the firm's share price since October 11, when Britain sold a majority stake in the near 500-year-old firm, has provoked criticism from unions and opposition lawmakers that the company had been sold off too cheaply.

Bankers from Citigroup, Deutsche Bank, JP Morgan and Panmure Gordon, none of whom worked on the flotation, have been asked to appear before a parliamentary committee to discuss their valuations of Royal Mail, a source with knowledge of the committee's plans said.

A date for the session had not yet been decided.

Since the sell-off local media have reported that some investment banks, including those invited to speak to the committee, had valued the company at above the 330 pence per share it was eventually sold for.

The committee has no statutory powers but its hearings could reignite the political debate surrounding the sale, which ended a decades-long debate about whether the firm should be sold off at all. Before the sale, the government faced public opposition and the threat of strike action from workers.

Government ministers have defended the valuation given to Royal Mail and say the pricing should be judged over the next six months to allow the initial market volatility to settle down.

The source said UBS and Goldman Sachs, which managed the initial public offering, had also been asked to give evidence to the Business Innovation and Skills committee.

The minister in charge of the sale, Vince Cable, and Lazard, the investment bank advising the government, are already due to appear before the committee on November 20.

Citi, UBS, JP Morgan and Deutsche Bank declined to comment. No one at Panmure Gordon or Goldman Sachs was immediately available to comment.

(Reporting by William James and Kylie MacLellan; Editing by Greg Mahlich)

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