Yesterday, in my humble opinion Vince Cable lied to the British people in a display of dishonourable dissembling that brings our politics into disrepute and explains why so many of the British public have nothing but contempt for the political class.
Here, Louise Cooper explains with unusual clarity exactly why his defence of the Royal Mail flotation price was a matter of incompetence and, as a former equity capital markets banker, I can say with certainty that her analysis is spot on.
Original Post from 20 November 2013
UBS and Goldman Sachs who were appointed by the government to run the privatisation advised that the Royal Mail was worth £3.7bn but other banks including JP Morgan and Citibank said that it was probably worth up to £10bn.
The shares are now trading at £5.60/share a 67% premium to the £3.30/share sale price and its largest shareholders are ‘activist’ hedge funds (including one of the most “aggressive” in the country) and foreign sovereign wealth funds. Facing criticism on the day the of the privatisation, Vince Cable said that the initial aftermarket price (it was immediately up by one-third) was froth and was not a fair way to assess the success of the privatisation. Based on todays price the British taxpayer appears to have lost even more than originally indicated in the aftermarket. The true scale of the loss to the British taxpayer is £1.1bn.
This is what happens when incompetent, greedy bankers advise incompetent, inexperienced government ministers.
Newsnight 19 November 2013
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- Update: Do you want the truth from your government or just what a minister believes to be true? Part 2(imincorrigible.wordpress.com)
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