Prudential warns of losses at Egg

Prudential warns of losses at Egg

UK insurer Prudential has warned that its Internet banking unit Egg is expected to report an operating loss in the second half of the year similar to the £39 million loss recorded in H1.

Mark Tucker, group chief executive of Prudential, which assumed full control of Egg in February, says during the third quarter Egg was "adversely affected by a marked deterioration in industry wide consumer behaviour".

The Internet bank saw lower-than-expected borrowing levels from customers, says Tucker, while levels of bad debt - particularly in relation to personal loans - exceeded forecasts.

He says there has also been a marked increase in consumers using individual voluntary arrangements, debt management firms and bankruptcy to reduce debt payments. These arrangements typically result in lower recoveries from customers.

Last week the insurer said it had hired HBOS retail banking executive Ian Kerr to head the Internet banking operation.

Kerr replaced Mark Nancarrow who has quit the Internet bank to join Thomas Cook Financial Services.

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