British online bank Egg quits France

13th July 2004, Comments 0 comments

LONDON, July 13 (AFP) - The British online bank Egg paved the way for its sale Tuesday after announcing it was to close its loss-making operations in France after less than two years.

LONDON, July 13 (AFP) - The British online bank Egg paved the way for its sale Tuesday after announcing it was to close its loss-making operations in France after less than two years.

Withdrawal from France was to cost Egg approximatley EUR 170 million (USD 210 million), the company said. It currently employs 450 staff in France.

"The board of Egg announces today that it intends to begin to take the necessary steps to withdraw from the French market," Egg said in a statement to the London Stock Exchange.

In a separate statement, British insurer Prudential said it was still considering proposals for its 79-percent stake in the online bank.

"A further announcement with respect to the conclusion of this transaction will be made, as appropriate, in due course," Prudential said.

Egg announced in October that it was looking for a partner for its French operations after the levels of investment required to grow the business were greater than Egg was prepared to make on its own.

But in January, Prudential put Egg up for sale.

Prudential has advised Egg that no potential buyer "has the appetite for the investment required to deliver the French business plan", the online bank said Tuesday.

Egg's decision to quit France "should increase Prudential's chance of disposing of its holding", UBS analyst Roger Hill said.

He added that "although it was always viewed as probable that Egg or a prospective purchaser would incur losses in France, the size of the expected loss is surprising".

Egg recently announced a doubling of annual losses to 34.4 million pounds in the year to December 2003 after its French unit wiped out profits from its British operations.

The bank has 133,000 clients in France, vastly lower than the one million clients it had hoped to have by 2005.

Egg's Chief Executive Paul Gratton said on Tuesday: "Following the slow start we experienced in France, we have been clear that Egg is not prepared to make the level of investment (in France) on a stand-alone basis that our revised plan shows the business needs for it to be successful." 

The price of shares in Egg was unchanged at 151 pence in afternoon trading in London.

Prudential rose 0.84 percent to 452.75 pence, while the FTSE index of 100 leading London shares was flat at 4,359.60 points.       

Egg entered the French market in November 2002, four years after its launch in Britain, where it employs about 2,000 staff.

 

© AFP

 

Subject: French news

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