Pru weighs up bid for NPI

PRUDENTIAL, the insurance giant, is considering a bid for National Provident Institution, the mutually-owned life insurer, Sir Peter Davis, chief executive of Prudential, said yesterday.

His comments came as Prudential launched "Egg", a direct banking venture that will sell financial services by internet, phone and mail.

Sir Peter said that the company "will certainly be having a look" at NPI, following the insurer's decision to put itself up for sale on Friday. However, he hinted that Prudential would not participate in an auction for the company. "I doubt if we'll be the people who will pay the top price," he said.

City analysts estimate that NPI could fetch up to pounds 1.5bn. A raft of foreign and UK financial groups including Swiss Life, AMP, Halifax and Abbey National have been mentioned as potential bidders.

Prudential said it would cost about pounds 150m over the next two years to set up Egg, creating 1,500 jobs by 2001. The company will take a pounds 75m charge in both 1998 and 1999, with the first profit contribution expected in 2001. Sources close to the company revealed that the company spent about pounds 1.25m choosing the name of the new venture.

The "Egg" name was selected by marketing consultant CLK, from a shortlist including Oxygen, 360 degrees and Popcorn. Mike Harris, chief executive of Egg, said the company was inspired by names such as Apple computers and Orange mobile phones.

The new service, which starts on Sunday, will initially offer savings accounts, mortgages and loans, with insurance and pensions to be added later.

The company aims to have pounds 5bn funds under management and more than 1m customers within the next five years, with around 400,000 customers in the first 12 months.

The Egg instant access saving account will offer a gross rate of 8 per cent for all deposits - almost 0.5 percentage points higher than the nearest competitor, the company said. Sir Peter said the company would not reap a profit out of the savings account but added that customers were expected to purchase other Egg products.

The new products, which differ from those offered by Prudential Bank, will be aimed at wealthy young professionals and older customers familiar with technological change.

Customers will be able to get personal financial advice and purchase the products on the Egg's website www.egg.com. There will also be a 24- hour, seven-day a week phone service from the company's new call centre in Derby.