Egg Bank gives internet banks a bad name
This is an illuminating article summarising the reasons that Egg doesn’t work, and the reasons are all associated with bad implementation, and problems with the parent.
The Pru needed the proceeds to shore up its UK operation, but no deal was consummated and the saga ultimately claimed the scalp of its then chief executive Jonathan Bloomer.
Source: Pru needs to be shot of its Egg bogeyman – Markets – Times Online
Some of the implementation issues are highlighted with the resultant bad debts.
But still the problem won’t go away. Egg’s profits have wilted, and it is heavily exposed to unsecured lending and indebted customers. Many borrowers are now using debt-management firms and buying themselves out of Egg, which is hitting profits hard.
And after all that, Prudential has apparently turned down Citigroups offer.
Colin,
The article is illuminating, thank you for pointing it out. But does it really say that implementation is the problem? Certainly – and as we’ve said here before – they might have credit policies that could do with a review – but does that really translate into the issues they’re having now? I got the feeling from the article that people were moving away from the brand. Why is that, I wonder?
James Gardner
December 11, 2006 at 01:48
I agree there are obviously deep seated problems with Egg, and the fact people are leaving them, as you point out, goes to a lack ot faith in the brand.
It just struck me that the reasons are not associated with being a Direct Bank, per se, but rather choices by the parent to solve their own issues.
The reason I thought implementation was that the choices made, were mostly associated with lending (unsecured lending, mortgages) which are well understood products, yet Egg seems to have failed miserably.
In general, The Times article reads that management issues are at play.
Colin
December 11, 2006 at 07:07
I’m a financial adviser who helps people with debt problems and I can tell you a number of my clients were with Egg and found their services and operations to be somewhat shoddy to say the least. BTW nice site. I’ll be sure to bookmark it. Thanks.
Matt
December 11, 2006 at 13:17
[...] El banco estadounidense Citigroup está considerando lanzar una oferta por el banco británico online Egg, propiedad de la aseguradora Prudential, informó el domingo el diario Sunday Times. El periódico dijo Citigroup podría estar preparado para pagar más de 950 millones de libras esterlinas (1.400 millones de euros) por Egg y que Prudential podría utilizar las ganancias para aumentar su negocio en Asia y su unidad aseguradora estadounidense Jackson National. [...]
Citigroup considera comprar el banco online británico Egg :: dadablog
December 11, 2006 at 20:27
Thanks for the comment Matt. Your site has an interesting view of the world!
Colin
December 11, 2006 at 22:22