LONDON, Jan 29, 2007 (AFP) – British insurance group Prudential on Monday exited the consumer banking sector with the sale of its loss-making Internet bank arm Egg to US giant Citigroup for 575 million pounds in cash. Analysts welcomed the news, which leaves Prudential to concentrate on insurance and asset management, but said the price fell far short of market rumours of 950 million pounds.
The sale, equivalent to 871 million euros or 1.125 billion dollars, will be completed by the end of April 2007 subject to regulatory approvals, the insurer said in a company statement.
“The sale of Egg to Citigroup realises greater value for our shareholders than retaining the business within the group,” Prudential chief executive Mark Tucker said.
“Citigroup is the largest credit card issuer in the world and sees enormous opportunities to develop Egg’s business in the UK.”
Under the deal, Prudential will continue to offer its life and pension products to Egg’s three million British customers for the next five years.
Egg had an operating pre-tax loss estimated at 145 million pounds in the year to December 31, 2006.
The business, which generates the bulk of its income through credit card lending, has