Citigroup to buy UK internet bank Egg for $1.13b in cash

London: US bank Citigroup has agreed to buy British insurer Prudential's loss-making internet bank Egg for £575 million ($1.13 billion) in cash, the two sides said.

Britain's second largest insurer has since last summer been reviewing its underperforming UK operations including Egg, hit by tough conditions in the personal loans market.

In full-year new business figures, due today but released early yesterday, Prudential said trading conditions at Egg had deteriorated further since it updated the market in October. Egg accounts for only a fraction of Prudential's group business, but the bank is facing a full-year loss, a potential embarrassment for Prudential Chief Executive Mark Tucker, who took the decision to buy out minority shareholders in 2005.

News of the Egg sale initially lifted Prudential shares by more than two per cent, but the stock was standing up 1.1 per cent.