ROYAL MAIL’S management is determined to resist pressure from ministers to sell off GLS, its thriving European parcels business, to raise capital to reduce its £4 billion pension fund deficit.

Amid signs of growing pressure from the Government, thought to be spearheaded by the Treasury, for Royal Mail to raise cash from its own asset base to tackle the pension deficit, it is understood that the company is intent on holding on to GLS.

Royal Mail’s directors, led by Allan Leighton, its chairman, are believed to regard the Amsterdam-based GLS as the “jewel in the crown” of the business, and a potent source of future growth. GLS made £1 million in profits last year and Royal Mail believes that the operation, which it has built up steadily after a series of acquisitions on the Continent, could be worth more than £1 billion.

Mr Leighton is also believed to oppose any sales from Royal Mail’s extensive property portfolio as a means to tackle the pensions shortfall, which leapt from £2.5 billion to more than £4 billion this year due to accounting changes.

The company’s management is thought, however, to see merit in a partial solution to the problem through a scheme being considered by PostComm, the postal regulator, which would try to tackle the pension deficit by linking it to increases in stamp prices. Royal Mail already is pressing for the price of a first-class stamp to rise from 30p to 39p within five years. PostComm has made an initial recommendation for a rise of only 4p, something that Royal Mail says would face it with a four-year loss of £1 billion.

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