First-e goes titsup.com

E-Bank is E-Sank

Online bank first-e is to shut up shop after failing to attract enough customers.

The operation, owned by Paris-based Banque d'Escompte, will close its UK and Germany operations next month.

Banque d'Escompte, which will continue its offline banking operations in France, yesterday signed an agreement with SelfTrade UK, owned by German outfit DAB bank, to sell the first-e customer base.

Account holders have until 30 September to decide what to do with their accounts.

Investment account holders can either switch to SelfTrade, move their account to any other bank, or do nothing - in which case the account will automatically move to Banque E'Escompte.

A representative for DAB said the bank would pay up to 338 euros ($302) for each customer who switches to its service.

Current account holders are being encouraged to move to fellow e-bank Cahoot.

First-e, which started trading in the UK in November 1999, has a total of 100,000 active customers in the UK and Germany combined. Approximately a third of these are in the UK.

Around 250 jobs will go at first-e's tech support centre for the UK and Germany, which is based in Dublin.

Alain Wormser, Banque d'Escompte chairman, said today first-e failed because it was unable to attract enough customers.

"The market conditions were not good enough for our business model to work," he said.

Wormser warned that it was not worth being an online bank in the current economic climate if the business had less than 500,000 customers.

"Unless you are a really big player, it is very difficult to be profitable and to bring customers the value they're asking for," he added. ®

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