Egg shares yo-yo on sale news
01 October 2004 | 4137 views | 0
Shares in UK Internet bank Egg have failed to rally despite news that it has received a bid for its unsecured lending business in France from Banque Accord.
Egg stock fell three pence to a 16-month low of 94 pence yesterday after Cazenove cut the bank's earning forcast for this year from £78 million to £65 million.
According to press reports, Cazenove - which acts as a broker to the online bank - said competition in the credit card market is fierce with a range of alternative providers, including Mint and HBOS, offering low prices and interest-free balance transfer periods.
Cazenove also cited doubts that the online bank would be able to meet targets for signing 500,000 new customers this year.
But Egg stock climbed to 106 pence in lunchtime trading on news that it has received a bid for its unsecured lending business in France, which includes 66,000 credit card customers, from Banque Accord.
The partial disposal would see approximately 100 of Egg's 450 employees in France move to the bank.
Egg announced in July it was closing its loss-making French arm after failing to find a joint-partner for the business. Financial terms of the deal with Banque Accord were not disclosed, but the bank says it is confident that the closure costs of Egg France will be delivered within the previously announced provision of €170 million.
Shares in Egg fell 20% in August after parent company Prudential ditched plans to sell its 79% stake in the Web bank.
By market close today, Egg's share price stood at 93.5 pence, down on yesterday's close but an improvement on the day's low point of 90.5 pence.