Times Online – Newspaper Edition

By Caroline Merrell

EGG, the internet bank, said yesterday that it was still in talks with potential buyers over its 1.2 billion sale, as it unveiled worse then expected full-year losses.
The loss of 34.4 million was more than double the 16 million loss recorded for 2002.

The bank, majority owned by the Prudential, was put up for sale at the end of last year, in the wake of that online bank�s disastrous foray in to the French banking market.

Egg s operating losses in France for the year rocketed by 91 per cent to 89.1 million. However, Egg s UK business has benefited from soaring consumer borrowing, and operating profit more than doubled to 72.8 million from 34.8 million a year earlier.

Paul Gratton, chief executive of Egg, said that it had cut discretionary spending at the French division, and was waiting for the outcome of the auction process before any final decisions were made about the division which employs a total of 400 staff. There are some options, and it all depends on what happens, he said.

The bank confirmed that Egg s customer liaison staff had each been given a retention bonus of 1,000 to ensure they stayed until October, when Egg s future will be decided.

Interested parties in Egg are thought to have included Royal Bank of Scotland and MBNA. RBS is believed to have lost interest because it recently took over a US credit card business for much less than that the expected price of Egg.

Mr Gratton said the sale process had not disrupted the UK business, which had made a great start to 2004. The bank is aiming to add about 500,000 customers this year after gaining 635,000 last year.

He pointed out that credit quality was stable and improving. Provisions for bad debts rose 60 per cent to 137 million, reflecting asset growth and increased unsecured lending.

The bank said in October that it was looking for a joint venture partner in France, after the development costs of the division soared. However, the plan was overtaken last month when Prudential said it was looking to sell its stake.