Analysts cool on £2bn Egg sale rumours

NEWS Prudential is rumoured to have put its stake in online bank Egg up for sale with a price tag in the region of £2bn. Reports at the weekend claimed Prudential has asked JP Morgan Chase to find a buyer for its 79 per cent stake in Egg, which it founded in 1998. If true, the move would represent a sharp about-turn on Prudential's comments on the back of Egg's financial results in July, when the Pru said it had no plans to sell the online bank. Egg finally moved into profit last year but has since been hit hard by the performance of its loss-making French business acquired from Zebank. It reported a first half pre-tax loss of £22.8m compared to a £1.2m profit the year before, with the French operations losing some £48.7m. But its UK operation, which boasts 2.6 million customers, continues to show signs of strong growth with a pre-tax profit of £36.7m compared to £11.6m in 2002. Sian Jones, managing analyst in the financial services technology group at Datamonitor, told silicon.com that Prudential, like other insurance companies, is looking to focus on its core business in a tough market. But ditching the whole Egg business and profitable UK brand on the back of the French performance would probably be a mistake, she said. "A loss-making internet bank is probably not the best fit at the moment and I would imagine it is increasingly difficult to justify given the performance of the French business. But if Prudential is looking to streamline, then maybe it could sell off the French business or partner in France. It is still a very strong brand in the UK and one of the biggest success stories in e-banking, so perhaps selling off the whole business is not the best thing to do," she said. A spokesman for Prudential said the company does not comment on market speculation and rumour.