Jobs to go as internet bank slips into red

Online bank Egg today announced 70 job cuts in the UK and said it was in talks which could lead to a sale of its struggling French arm.

Egg said it expected to reduce its headcount across the business in the fourth quarter following a scaling back of its short-term international ambitions.

The group revealed that it is in negotiations with more than one party about a possible joint venture or “other transaction” involving its loss-making French credit card business.

In July, Egg said losses of £48.7m (€69.7m) in the French business had pushed the group into the red.

Chief executive Paul Gratton said a new strategy that Egg had developed for the French business would take longer and would need a greater level of investment than the bank was prepared to undertake on a stand-alone basis.

He added the group believed it was in the best interests of Egg’s shareholders to form an alliance with a strategic partner. He declined to identify those involved in the talks.

“Accordingly, we are in negotiations which may lead to a joint venture or other transaction,” he said.

“We anticipate that these negotiations will be concluded by the end of this year.”

Egg employs about 2,600 people, of whom some 2,000 work at its call centres in Derby and Dudley and its head office in London.

Announcing results for the nine months to September 30 today, the group said its loss before tax was £24.9m (€35.6m).

While Egg UK delivered pre-tax profits of £56.7m (€81m) during the period against £21m (€30m) last time, the French operation made a pre-tax loss of £69.5m (€99.5m) during the same period.

Egg said it now had more than three million customers in the UK, with 145,000 net new customers acquired in the third quarter against 107,000 in the same quarter last year.

Earlier this month, reports said Egg’s majority stakeholder, insurance group Prudential, had put its 79% interest in the online bank Egg up for sale with a £2bn (€2.8bn) price tag.

A Prudential spokeswoman refused to comment on the report at the time.