NEWS Internet bank Egg has announced it is to pull out of France and axe 450 jobs after its loss-making move into the country started to turn off potential investors in the company.
Prudential is still reported to be in talks with parties interested in its 79 per cent stake in Egg, but the company had grown concerned that Egg's purchase of Zebank in 2002 was proving to be the kind of 'home improvement' that was putting off potential buyers.
Since the £23m deal went through Zebank has proven to be a thorn in Egg's side, detracting from the balance sheet with sizeable losses. As such the decision to cut its losses and bail on the French unit will come as a surprise to nobody - not least of all silicon.com, which mooted the move back in October 2003.
But the losses won't stop immediately. According to Egg the cost of closing the French unit is expected to be around £113m.
Paul Gratton, CEO of Egg, said in a statement: "Following the slow start we experienced in France, we have been clear that Egg is not prepared to make the level of investment...that the business needs for it to be successful."
"We have a great team of people who have been very patient and loyal during this period of uncertainty and we will be making every effort to assist in their redeployment," he added.
