* Goldman Sachs, UBS questioned by lawmakers
* Royal Mail shares up as much as 80 pct since sale
* Advisors had considered raising offer price range
By Neil Maidment and Kylie MacLellan
LONDON, Nov 20 (Reuters) - Goldman Sachs and UBS bankers said Britain could not have sold the RoyalMail postal service at its current higher price,rejecting accusations that one of the biggest privatisations inyears had short-changed taxpayers.
The two banks, which led Royal Mail's London stock marketlisting, were summoned before a parliamentary committee onWednesday to explain why they had priced the near 500-year oldfirm so far below its current market value.
Royal Mail's shares have rocketed by as much as 80 percentsince Britain sold a 60 percent stake in October for 330 pence($5.30) per share, sparking criticism from unions and oppositionlawmakers that the banks set the sale price too low.
The spotlight on the sell-off, one of the most significantsince John Major's Conservative party sold the railways in the1990s, comes as the government is aiming to offload shares inLloyds Banking Group and rival RBS.
Adrian Bailey, chairman of the Business Innovation andSkills committee and a member of the opposition Labour party, criticised the Royal Mail sale price.
"It is possible that the government has lost over 1 billionpounds worth of revenue for taxpayers at a time of greatausterity," he told Reuters after the hearing.
Richard Cormack, co-head of equity capital markets atGoldman Sachs said feedback from potential investors on whatthey were prepared to pay and the large stake on offer wereamong factors that had determined the price.
UBS banker James Robertson agreed. "The current price is notreflective of what we could have sold 600 million shares for,"Robertson told the committee. Varying views of risks facingRoyal Mail, such as its lack of proven profitability, led todiffering valuations by a number of banks, he said.
Royal Mail shares rose 38 percent on their first day oftrading as investors piled in, prompting the committee to askwhether someone had been mislead in the sale process.
"Did investors con UBS and Goldman Sachs, or did UBS andGoldman Sachs con the government?," said Bailey.
Goldman Sach's Cormack suggested it was the former.
"We consulted with the market (during the float)...We didn'tget indications they were prepared to pay the levels that havebeen paid in the quantities that some of those institutions havebought," he said.
Strong equity markets have helped the amount raised inLondon stock market listings so far this year more thanquadruple to $14.5 billion from the same period in 2012.
The sale, in which Royal Mail staff were also given a 10percent stake, valued the firm at 3.3 billion pounds ($5.31billion). The stock was trading at 543p on Wednesday.
COOL PERFORMANCE
A cool performance from the UBS and Goldman Sachs bankers inthe face of tough questioning from the committee was backed upby the bankers who were not involved in the sale.
Citigroup, Deutsche Bank, JPMorgan and Panmure Gordon also appeared before the committee todiscuss pitches they made to government several months beforethe sale, in which they valued Royal Mail's equity at 3.7billion to 8.5 billion pounds.
Citi's Ben Story said it was "incompatible" to compareearlier higher valuation estimates with the eventual offerprice, due to the lack of detailed company information availableto the banks at the time.
However, UBS and Goldman said they had advised thegovernment in the days before the sale that they could get asmuch as 20p per share above the 330p offer price, but decidedagainst taking the rare step of upping the range.
The bankers said the looming threat of industrial action byRoyal Mail staff and debt problems in the United States had beenkey factors in that decision.
The Communication Workers Union, which represents Royal Mailstaff, said the government had overplayed the impact of the riskof a strike, adding Vince Cable, the minister in charge of thesale, will have important questions to answer when he appearsbefore the same committee on Nov. 27.
In a note on Wednesday, UBS told investors to sell RoyalMail shares, warning there was too much optimism about futuremargin growth. It set a target price of 450p.
