Egg offloads funds supermarket to Fidelity
19 October 2004 | 8375 views | 0
UK Internet bank Egg is to offload its loss-making funds supermarket operation Egg Invest to Fidelity FundsNetwork as it continues to refocus on its core UK business.
The move to ditch Egg Invest - which claims 60,000 customers and assets under management of around £170 million but reported losses of £9.2 million last year - comes as the Internet bank posts a further loss before tax of £103 million for the nine months to end-September 2004. This includes £35 million in operating losses from Egg's French business and £113 million in exit costs.
Earlier this month Egg received approaches for the consumer credit, savings and brokerage businesses in France which would result in the redeployment of up to 140 people.
Egg says no jobs will be lost as a result of the transfer of its funds supermarket to Fidelity. The transaction will result in one-off costs of £3 million and lead to annual savings of a similar amount moving forward.
The deal is expected to be completed by Q1 2005, at which point Egg will host Fidelity's FundsNetwork on its Website as its exclusive investment platform.
Egg says the core UK business delivered a "satisfactory set of results" for the first nine months, reporting a profit before tax of £53 million compared to the £57 million reported for the same period last year.
Paul Gratton Egg CEO says uncertainty over the potential sale process initiated by parent Prudential, increased competition for deposits and rising interest rates have each played a part in restraining growth.
"Looking forward, Egg people are firmly focused on the future development of our core UK business, leveraging our brand and high quality customer base to expand our franchise," he says. "We have recently launched a discount tracker mortgage product and we have an increased focus on general insurance cross sales, given research in our customer base indicates a high propensity to buy these products from Egg."