Egg Banking

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Egg Banking plc
Type Subsidiary
Industry Finance and Insurance
Founded United Kingdom (1998)
Headquarters Derby, England, United Kingdom
Products Financial Services
Employees 1,100
Parent Yorkshire Building Society
Website www.egg.com

Egg is a former British internet bank headquartered in Derby, that is now a trading name of Yorkshire Building Society. Egg was born out of the UK banking arm of Prudential plc, Prudential Banking plc, which was established in 1996, and the Egg brand was launched in 1998.

It was only possible to operate an Egg account over the internet, or via their call centre. Egg specialised in savings and general insurance but no longer offers loans, credit cards or mortgage products.[1] The credit card business was sold to Barclaycard, followed by the remaining savings and mortgage business to Yorkshire Building Society, which subsequently transferred all remaining customer accounts over from Egg.

Following the sale of its assets, Egg Banking plc, which remained under the ownership of Citigroup, was renamed Canada Square Operations Limited and continues to handle matters relating to certain Egg products from before the sale of assets and any assets that were not transferred to the new owners.[2]

History[edit]

Egg was established as a division of UK life assurance company Prudential. Prudential Banking was involved in direct selling of savings and mortgage products. In 1998 the division was renamed Egg and relaunched as the UK's first Internet bank. The service gained in popularity, and soon the bank had more than 2 million customers. In 2000 Prudential cashed in on its stake and floated 21% of the company on the London Stock Exchange, retaining 79%. In 2003 Prudential announced its intention to sell its remaining stake in Egg to a third party. Despite rumours of interest from the likes of Royal Bank of Scotland and HSBC, no formal offers were made public, and Prudential dropped its plans in 2004.

Subsequently Prudential bought back the remaining minority share in January 2006 and de-listed the organisation from the London Stock Exchange. Chief Executive Officer Paul Gratton left the organisation in March 2006 to be replaced by then Chief Operating Officer Mark Nancarrow. Mark was subsequently replaced by Ian Kerr, formerly of HBOS, in November 2006.

On 29 January 2007 Prudential announced that it had agreed to sell Egg to Citigroup for a consideration of £575 million subject to approval by the Financial Services Authority.[3][4]

On 1 May 2007 the sale of Egg to Citi was completed and Egg CEO Ian Kerr was appointed head of Egg and Citi UK Consumer.[5]

In early 2008 Ian Kerr left the business and was replaced in March by Bert Pijls. Bert joined Citi in 1990 and has held several roles in the bank.[6]

In November 2007 approximately 350 non-specialist roles were moved from the Dudley centre to Derby resulting in redundancies and relocation packages. The Dudley office has now been closed.

On 1 March 2011 Barclays Bank announced that they had agreed to buy Egg's more than 1 million UK credit card accounts from Citigroup.[7] Barclay's Barclaycard division took over the Egg credit card business in May 2011 after Citi had spent time trying to sell the business as part of its Citi holdings portfolio. Citi and Barclaycard share the same site at Pride Park but it was announced on 21 June 2011 that Barclaycard would not require to continue operations in Derby and will move operations to their Kirkby and Northampton sites, leaving 659 people redundant.

On 25 July 2011 Egg announced the proposed sale of all savings and mortgage accounts to Yorkshire Building Society. This would complete Citigroup's sale of the Egg business.[8]

Egg France[edit]

Capitalising on its British success, Egg launched in France in mid-2002 with La Carte Egg. Despite investing heavily in the French market, the services were never popular with the French, who generally hold fewer credit cards than the British. In 2004, Egg decided to close its French operations, selling the unsecured lending business to fr:Banque Accord[9][10] and the savings and brokerage businesses to ING of the Netherlands.[11][12]

Controversies[edit]

On 2 February 2008, Egg chose to cancel the credit cards of 161,000 (7%) of its customers. The bank gave customers 35 days' notice, after which they would not be able to spend more on their cards.[13] While publicised as an attempt to purge "risky" customers from their books, many affected customers came forward with claims that they had excellent credit histories. This led to speculation that the move was an attempt to remove customers who did not accumulate interest on their accounts and therefore did not generate profit for the bank.[14]

The Financial Services Authority fined Egg £721,000 in December 2008 for the persistent misselling of payment protection insurance (PPI) on its credit cards.[15] The authority's director of enforcement, Margaret Cole, said "Egg used inappropriate sales techniques to try to persuade customers to buy payment protection insurance on their credit card, even when they asserted they did not want the cover."

During 2008, Egg attempted to have one of its customers gaoled, saying the chip & pin cards were 'uncloneable', and the customer was 'clearly lying' about transactions from an ATM. The police arrested the customer, but after much investigation, the case fell apart.[16]

References[edit]

  1. ^ "Credit Cards Saving Accounts Insurance Egg". Egg.com. Retrieved 17 February 2011. 
  2. ^ http://www.citibank.co.uk/personals/cards/cards/feedback/egg.htm
  3. ^ "About Citi". Press Room. Citigroup.com. 19 April 2010. Retrieved 21 May 2010. 
  4. ^ "Prudential sells Egg to Citigroup". Finextra. Retrieved 2010-05-21. 
  5. ^ "Citi completes Egg acquisition". Finextra.com. Retrieved 2010-05-21. 
  6. ^ "Bert Pijls Linkedin profile". linkedin.com. Retrieved 2011-02-17. 
  7. ^ "Egg credit cards bought by Barclays bank". www.bbc.co.uk. 2011-03-01. Retrieved 2011-03-10. 
  8. ^ Osborne, Hilary (2011-07-25). "Yorkshire building society to buy Egg™'s savings and mortgage accounts". London: www.guardian.co.uk. Retrieved 2011-07-29. 
  9. ^ "GROUP NEWS RELEASES - Update on closure of Egg France". Prudential.co.uk. Retrieved 2012-04-18. 
  10. ^ "Egg agrees £96 million French sale to Banque Accord". Finextra.com. Retrieved 2012-04-18. 
  11. ^ "ING in talks to buy Egg's savings unit". London: Guardian.co.uk. 2004-10-06. Retrieved 2012-04-18. 
  12. ^ "Egg sells French business to ING". Finextra.co.uk. Retrieved 2012-04-18. 
  13. ^ "Egg acts over 'risky' customers". BBC News. 2 February 2008. Retrieved 2008-02-02. 
  14. ^ "Egg's 'risky' customers answer back". BBC News. 2 February 2008. Retrieved 2008-02-02. 
  15. ^ Barrow, Becky (2008-12-11). "Egg credit card fined £720,000 for persuading 40,000 customers to buy insurance they didn't want". Daily Mail (London). 
  16. ^ http://www.bbc.co.uk/iplayer/episode/b011l7j9/Fake_Britain_Series_2_Episode_7/

External links[edit]