Egg flees France
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Egg, the UK e-bank, is fleeing France and 450 employees. The cost of extricating itself from this debacle is €170m.
Prudential, the insurance firm and majority owner of Egg, has put the group up for sale, and US credit card firms and UK banks are said to be sniffing. But Egg is unwilling to pump in the money to turn round the French subsidiary and neither are the potential buyers.
This is how Egg puts it:
"The [selling the company] process has progressed to a stage at which it has become clear that no potential purchaser has the appetite for the investment required to deliver the French business plan, and accordingly, the board of Egg announces today that it intends to begin to take the necessary steps to close its business in France.
Egg's withdrawal from France comes as little surprise, with City folk speculating about its departure as far back as October last year. In 2003, Egg France lost £89m, dragging the group into loss.
Egg opened in France in 2002, following the £3.5m acquisition of Zebank - the country's first e-bank owned by owned by Groupe Arnault and Dexia.
At the time Egg said it would spend around £15m in development costs plus £50m in marketing. It forecast that it would attract one million punters in the first three years and predicted it would make a profit by the end of 2004.
But early attempts to promote its credit cards misfired, and the company underestimated the hold of store cards on the French market. As early as May 2003, Egg said it would have to double its investment in France. ®