Lloyds TSB is emerging as a surprise front runner to buy UK Internet bank Egg, according to a report in Sunday broadsheet The Observer.
The UK weekly says Lloyds chief executive Eric Daniels is winning around directors to his view that Egg will enable Lloyds to boost market share and cross-sell its products to the Internet bank's 3.2 million customers.
The paper says a possible sticking point is insurer Prudential's insistence on a premium price for its 79% stake in Egg. At least two bidders, including early favourite Royal Bank of Scotland, are understood to have been put off by Prudential's asking price.
Analysts had initially valued Egg at £1.6 billion but now expect the price to come down following last week's results statement when Egg reported a doubling of losses to £34 million, mainly due to disappointing figures from its troubled French business.
In other news, Egg is e-mailing customers of plans to scrap its digital TV banking service because of disappointing uptake. According to reports in the computer press only 1300 of Egg's 3.2 million customers made use of the service, which was launched in December 2000 and accessible via Sky TV.