Don't pay banks for failure, says CWU

[TrueBlueTerrier]

http://www.cwu.org/news/archive/don-t-p ... s-cwu.html" onclick="window.open(this.href);return false;

19th November 2013

Ahead of tomorrow's BIS Select Committee - which will see MPs grill representatives of the banking industry who provided valuations of Royal Mail prior to privatisation - the Communication Workers Union calls on the government to withhold any further payments on the basis that they undervalued the company and lost the taxpayer hundreds of millions of pounds.

Billy Hayes, CWU general secretary, said: "Hundreds of millions of pounds of taxpayers' money have been lost because of the failure of the government and its advisors 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?"

The Royal Mail share price was set at 330 pence when it floated on 11 October. It soared by more than a third within minutes of trading and reached over 587p earlier this month. Within a week the share price had broken the 500p mark - an increase of more than 50%. The share price today stands at more than 550p - meaning at today's prices the government undervalued the company by more than £2bn and taxpayers have lost £1.3bn on the sale of shares as the government would have raised £3.3bn in share sales instead of the £1.98bn (before fees, expenses and underwriting commissions) it actually raised.

It has been reported that JP Morgan valued Royal Mail at between £7.75 and £9.95bn, while Citi Bank put an upper valuation of £7.3bn on the company and Deutsche Bank argued that Royal Mail could be worth between £6.4bn and £6.9bn. However, the government decided to float the company on a much lower share price of 330p despite shares being oversubscribed twenty times over.

The Select Committee is taking place at 9:30 on Wednesday 20 November in the Grimond Room, Portcullis House.

People appearing:

John Mayne, Managing Director, UK Client Coverage, JP Morgan
Ben Storey, Head of UK Investment Banking & Broking, Citibank
Gert Zonneveld, Managing Director, Co-Head of Research, Panmure Gordon
James Agnew, Chairman of UK Corporate Broking, Deutsche Bank
James Robertson, Managing Director, UBS
Richard Cormack, Managing Director, Co-Head of Equity Capital Markets, Goldman Sachs
**Watch the meeting live online >here<**

[cloherty1976]

http://www.cwu.org/news/archive/don-t-p ... s-cwu.html

19th November 2013

Ahead of tomorrow's BIS Select Committee - which will see MPs grill representatives of the banking industry who provided valuations of Royal Mail prior to privatisation - the Communication Workers Union calls on the government to withhold any further payments on the basis that they undervalued the company and lost the taxpayer hundreds of millions of pounds.

Billy Hayes, CWU general secretary, said: "Hundreds of millions of pounds of taxpayers' money have been lost because of the failure of the government and its advisors 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.

One good thing though is that there was such demand for the shares that the price has shot up which was very good for us posties who were given free shares and also we had the opportunity to buy upto £10000 worth of shares too. If they had been priced higher we might have seen a different position as demand would only have been so high and prices might be a lot lower.