Egg clears out senior management; reports fall in UK profit

Egg clears out senior management; reports fall in UK profit

Web bank Egg is axing a number senior management roles, including its finance director David Doyle, under plans to save £12m a year. The news comes as the bank reports a 37% fall in first quarter profit at its core UK business.

In a statement Egg says Doyle will leave after the firm's annual general meeting in May. Doyle was appointed in October 2003 to prepare the bank for the sale initiated by parent company Prudential in February 2004 that never took place.

Following his departure, Paul Gratton, CEO, will take responsibility for the risk, audit and legal functions, as well as the overall strategy of the group.

Egg said in January that Mike Harris, founder and former chief executive of the bank, is retiring from the role. Company secretary and group chief legal officer Marcus Ezekiel is also leaving the bank after the AGM. He will be replaced by his deputy Sue Windridge.

Ousted Prudential chief executive Jonathan Bloomer, who failed to secure a buyer for Egg last year, is also stepping down from the group's board.

The corporate shake-up and cost cuts follow market rumours suggesting that Mark Tucker, who replaces Bloomer as chief executive of Prudential, is looking to sell off the Internet bank as soon as he joins the company in May.

Commenting on the restructuring, Gratton says: "We have been exercising strong control over our costs. This restructure aligns our senior management more closely with our strategy which is now fully focused on the core UK business."

But Egg is reporting a drop in UK operating profits for the first quarter to £9.9m, compared to £15.7m last year. The bank says the dip is due to the switch to new pan-European IFRS accounting rules. Revenues in the UK in the quarter were £125m, up four per cent compared to the run-rate in Q1 through Q3 last year.

On a group level, Egg posted first quarter profit before tax of £5m, compared to a loss of £3.9m last year. Group operating income was up six per cent to £125m.

The Internet bank also says that its exit from France is now complete and closure costs are expected to be EUR5m lower than its previous provision of EUR170m.

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