Banks Face 'Tough' Royal Mail Sale Fee Talks

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As the Government prepares to hire banks on a Royal Mail sale, insiders warn that City fees will be modest, Sky News understands.

Michael Fallon, the business minister, will tonight take another step towards the controversial privatisation of Royal Mail by launching a process to hire banks to handle the share sale.

In a speech at Policy Exchange, the think-tank, Mr Fallon will announce that the Government will issue tender documents for banks to work on an initial public offering (IPO), which would see Royal Mail floated on the London Stock Exchange.

His remarks, which will include a warning to trade unions to engage with the coalition over the privatisation or risk their members missing out on a prospective share windfall, will provide the clearest signal so far about the intention to pursue a share sale this year.

"There has already been press coverage about Government and Royal Mail appointing advisers to take forward a sale," Mr Fallon is expected to say.

"We will soon be issuing a tender for the procurement of a syndicate of banks that, if this is the sale route chosen, will execute a sale of shares."

Mr Fallon is not expected to refer to the fees that investment banks will receive for handling a stock market flotation but insiders said that the Government would be "tough" with external advisers.

"This is the most prestigious mandate handed out by the Government for years," a source close to Royal Mail said. "The bankers who work on it will not be getting rich on the back of this deal."

Lazard and UBS have been advising ministers on preparations for the flotation, but UBS would have to re-tender for a role on the IPO itself under public sector procurement rules.

Last week, Sky News revealed that the banks were courting a number of private equity firms about a deal to buy a stake in Royal Mail if the flotation was not viable.

Mr Fallon will not set out concrete details tonight about the structure of the employee share ownership scheme. These are expected to be made public in the coming weeks.

The minister will attempt to rebut union concerns about the privatisation of Royal Mail by arguing that injecting private capital is not an ideological pursuit but a commercial move that is in the best interests of the company and its staff.

"People should be in no doubt, whether the shares are discounted, or free, it is a hugely significant commitment from the Government to Royal Mail’s workers," the Daily Mail claims he will say.

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the Daily Mail claims he will say.

Does two lying scumbags act like a double negative?