The giant UK insurer, life assure and pensions provider Prudential is in talks with US credit card provider to sell the 79 per cent stake it has in the Egg online banking and fund supermarket business it created at the height of the Dot Com boom five years ago. Prudential sold a 21 per cent stake in Egg in an IPO in 2000. It is thought that Prudential wants to sell in order to make an acquisition in the United States, where it already owns Jackson National Life.
Egg has a 5 per cent share of the UK credit card market, as well as 3 million customers, and would have made its first profits in 2003 but for a disastrous attempt at breaking into the French market, where a Euros 170 million investment in La Carte Egg (after buying French internet bank Zebank for 5 million) attracted little interest among French consumers. The French business made losses in the first nine months of last year of Euros 69.5 million – enough to offset profits in the UK of 56.7 million in the same period.
Egg posted an overall loss of 24.9 million in the same period, against a loss of just 3.9 million in the same period in 2002. Losses at Egg France had spiralled from 19.4 million to 69.5 million, with just 58,000 credit cards in circulation in France with balances totalling only 88 million.
MBNA, the worlds second-largest credit card issuer, bought the credit card business of UK mortgage lender Alliance & Leicester for 225 million in August 2002. Other buyers who would welcome Egg’s credit card clientele include Capital One, Royal Bank of Scotland, Lloyds TSB and Barclaycard.