Internet bank Egg splits from owners

UK's first internet bank to be swallowed by Barclaycard

The UK’s first internet bank, Egg, has been split, with current owners Citigroup selling off its credit card business to Barclaycard for an undisclosed sum.

The sell-off marks an end to one of the UK’s dot-com superstars, which once boasted a valuation of £1.3bn.

It is expected that the deal should be finalised by May, with all of Egg’s remaining 1.15 million credit card customers getting a new Barclaycard later this year.

“The acquisition of Egg’s UK credit card accounts has been priced at a significant discount to gross receivables,” said Chris Lucas, group finance director of Barclays.

Egg was first established by insurance group Prudential in 1998, quickly gaining two million customers.

But in the wake of the dot-com collapse, and following a disastrous foray into the French market, Egg was eventually sold to Citigroup in 2007 for £575m.

Its fortunes have improved little since then. It has been part of Citigroup’s 'bad bank’, which was formed after the group was bailed out by the US government.

Citi has been touting Egg’s availability since last summer.

The sell-off will involve some heavy lifting in terms of IT. Citigroup spent 18 months integrating Egg's IT systems following its acquisition, including the centralisation of core infrastructure and application development.