Citigroup looking to offload Egg

US financial giant Citigroup is reported to be looking for buyers for its Egg Internet banking operation which was acquired back in 2007 for over £500 million. The operation, which was originally part of the Prudential Group, has been hit by the difficult trading climate in the UK and posted a loss of £106 million in the six months to June 2009. However, it is the underlying financial strength of Citigroup as a whole which has probably forced the group to enter talks with potential buyers.

The company is said to be in talks with a number of potential trade and private equity buyers although as yet no figures have been mentioned although the group is unlikely to recoup anywhere near the £500 million invested just three years ago. It will be interesting to see if a deal can be struck in the short to medium term and at what level the company is willing to dispose of the operation.

Even though the Egg operation was literally created from nothing, and grew very quickly into one of the U.K.'s best known online banking operations, Prudential found it difficult to sell on the operation in the past. Indeed after buying out its original partner in the operation in 2005, in a deal which valued the company at £900 million, it was later forced to take a large loss on the sale to Citigroup.