RBS tipped to poach Egg stake from Pru

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The Independent Online

The auction for Egg was entering its final stage yesterday, with Royal Bank of Scotland thought to be a front-runner in the race to buy the internet bank.

RBS has been widely tipped by analysts as having the most advantageous fit with Egg, which controls 5 per cent of the credit card market in the UK and appeals to higher-earning customers.

Prudential, which announced last week it had been approached about selling its 79 per cent of Egg, is still thought to be speaking to several parties about a possible deal. There has been speculation they include America's credit card giants MBNA and Capital One. In the UK, HBOS might be interested.

Lloyds TSB has also looked at the business but is thought to have decided against a bid. Barclays, which already operates the single biggest credit card brand - Barclaycard - has decided against bidding.

RBS refused to say whether it was in talks with Prudential. But analysts said Egg would slot into its strategy of operating banking services under various brands. As well as RBS and NatWest, the bank provides services for Tesco Financial Services and bought Churchill insurance last year.

One analyst said: "The bank has been very successful at the multi-brand approach, and has various channels covered such as insurance, banking and supermarkets. But it hasn't really got internet off the ground."

RBS, which would have to pay in the region of £1.6bn to get Prudential to agree to a deal, could squeeze some value out of integrating Egg's mortgage and savings businesses into its own.

Fred Goodwin, the chief executive of RBS, is rumoured to have quietly scrapped plans to buy Sovereign Bancorp in Philadelphia, which is capitalised at $7bn.

The Edinburgh-based bank has also finished paying dividends for its takeover of NatWest.