Shares in UK Internet bank Egg have firmed up as speculation mounts that the company is preparing to pull back from its costly attempts to crack the French market.
Egg shares touched 126 pence yesterday as rumours flew that the company was planning a hasty exit strategy from its costly French adventure. By mid-day Friday, the share price had climbed to 134 pence, as markets re-assessed the bank's prospects.
Reporting a £48.7 million loss from the French business in June, Egg chief executive Paul Gratton said: "We continue to closely monitor performance having regard to our planned €300 million profit and loss investment."
Market analysts have contributed to the uncertainty surrounding the future of the French business, speculating that the bank might be prepared to cuts its losses and run, earmarking what's left of the €300 investment for charges against redundancies and shut down costs.
UK insurance group Prudential, which owns 79% of the business, declined to comment on rumours earlier this year that it was preparing to sell its stake in the venture. An early exit from France could make the business more attractive to prospective investors. Prudential recently installed its own man, David Doyle, as finance director in a move interpreted as a prelude to a full-scale financial review.
While Egg UK delivered strong growth in customer numbers, lending balances and profits during the first half of the year, sales volumes in France disappointed. The performance of the French business will be keenly analysed when Egg reports its third-quarter results later this month.