07/02/2014 05:47 GMT | Updated 07/02/2014 07:59 GMT

Royal Mail 'Could Have Been Sold For £1.5bn More' Say Banks

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An embroidered logo sits on the shirt pocket of a Royal Mail Group Ltd. postman as he delivers mail in Hornchurch, U.K., on Wednesday, July 10, 2013. The U.K. government will sell a majority stake in Royal Mail Group Ltd., the 360-year-old state postal service, through an initial public offering before the end of March, Business Secretary Vince Cable said. Photographer: Chris Ratcliffe/Bloomberg via Getty Images

Vince Cable is facing further accusations of selling Royal Mail "on the cheap" after it emerged that 21 City banks estimated its sale could have been done for £1.5 billion more.

The Business Department revealed in response to a Freedom of Information request that the average valuation for Royal Mail by the 21 investment banks was between £4 billion and £4.8 billion, significantly above the £3.3 billion price tag decided upon by ministers when floating 60% of the business on the stock market in October.

After Royal Mail's stock market entry at 330p in October, the business' shares made the biggest one-day gain of any privatised company. Last night they closed at 585p, with the share price at £6 billion.

Responding to reports of investment banks' average valuation of the Royal Mail being higher than what it was sold for, Nick Clegg told LBC 97.3 that Vince Cable is "not a share price expert".

He added: "He took advice from people who gave him a range, independently of what the fair share price should be."

Royal Mail's stock market performance has seen it join the FTSE 100 index of top performing businesses on the stock market, alongside household names like BP and Sainsbury's.

Shadow business secretary Chuka Umunna said: “We now know the banks expected the company to be worth more than the Government sold it for. We also know that ministers considered and rejected a higher price.

“The failure of David Cameron’s Government to get a fair price left taxpayers short-changed.”

Business minister Michael Fallon defended the sale as he that that taxpayers were benefiting from Royal Mail's rising share price as the government still owns a 30% stake.

“The banks who made these early valuations have ad­mitted they cannot be compared with those reached at the end of any sale process.”

“We carried out a successful sale that secured almost £2bn for the taxpayer and long-term investors in Royal Mail.

"We still own a 30 per cent stake in the company and the subsequent rise in the trading price of shares in Royal Mail ensures that taxpayers continue to benefit from any strengthening in the share price.”