Egg pulls out of France

Egg pulls out of France

UK Internet bank Egg is shutting down its loss-making French operations, leading to the loss of around 450 jobs, in a bid to make it more attractive to potential buyers.

Egg's losses more than doubled to £34.4m last year due to its troubled business in France. The Internet bank has struggled in the country since launching its La Carte Egg credit card in 2002 following its acquisition of online bank Zebank.

In October last year the bank said it was seeking a joint partner for the French business, but this search was superseded by Prudential's announcement in January 2004 that it was in talks to sell its 79% stake in the online bank.

Egg says the decision to shut down the French unit was made after it was advised by Prudential, that "no potential purchaser has the appetite for the investment required to deliver the French business plan".

The bank says the cost of closing its French business will be around EUR170m, with the loss of about 450 jobs in Tours and Paris.

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

Prudential remains in discussions to sell its share in Egg. US credit card firm MBNA, Royal bank of Scotland, Citibank and HSBC have all been touted as potential bidders, but more recently, US credit card company Capital One was rumoured to have offered $1.7bn for the Web bank.

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