Barclays lines up tilt at Citigroup's Egg
Saturday 09 October 2010
Barclays is one of the companies through to the second round of bidding for Egg, the online savings bank and credit-card provider.
Successful bidders were told yesterday by Egg's owner, Citigroup, that they were through to the next round. The US investment bank is looking to raise up to £400m from the sale, which is also understood to have interested the American private-equity giant Blackstone.
Barclays declined to comment yesterday. A spokeswoman for Citigroup said: "We do not comment on market rumour and speculation."
If Barclays wins the race for Egg, it is likely that it would merge the bank with its existing credit-card business, Barclaycard. A deal would also mirror one earlier this year when Barclays bought a number of Citigroup's credit-card businesses in Europe. It has also added the Goldfish credit card to its portfolio recently. Citigroup has an ongoing policy of selling off non-core assets, and launched the auction for Egg in August. At the time, it was reported that Citi was looking to raise about £500m from the sale.
Egg, which was launched by the insurance company Prudential, was one of the first online banks in the UK. If the figures reported yesterday are accurate, it is likely that Citi will make a loss on the business it bought just three years ago, when it paid £546m. At the time, it fought off competition from Royal Bank of Scotland.
In August, a spokesman for Citi said: "Citi's strategy is to reduce the assets and businesses within Citi Holdings – its portfolio of non-core operating businesses and assets – in an economically rational manner, while working to generate long-term profitability from Citigroup, its core franchise."
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