Citi sells Egg credit cards to Barclays

 
Elizabeth Fournier
BARCLAYS is buying the UK credit card portfolio of Egg from the online bank’s US owner Citi, transferring more than 1m customer accounts to the Barclaycard brand.

The value of the deal, which is subject to regulatory approval, has not been disclosed, but Barclay’s said it was buying the assets at a “significant discount” to the gross value of the accounts involved. Citi expects to realise an after-tax gain from the sale.

Due to divergent accounting policies at the banks, Barclays and Citi released different valuations of the portfolio.

Barclays’ calculation of £2.3bn uses IFRS standards, which includes any overdue accounts from the past 12 months. Citi’s US GAAP treatment of the figures means those accounts are excluded – valuing the portfolio at £1.8bn.

Barclays group finance director Chris Lucas said he expected the deal to exceed the financial return targets set out at the bank’s recent results announcement.

In October, when a potential deal with Barclays was first mooted, analysts valued the online bank at between £300m-£500m.

Egg, which is based in Derby, has long been the subject of takeover speculation, with owner Citi under pressure to shrink its balance sheet after its bailout by the US government.

Citi bought Egg from British insurer Prudential in 2007 for £575m.

The sale will affect 1.2m Egg customers, who will have to wait for the deal’s final terms to find out if they will still be entitled to their existing rewards programme once the two systems are integrated.

Holders of Egg credit cards can currently get cashback on a variety of purchases, including Apple iPads and iPods, Debenhams products, and RAC home insurance.

New customers of the Egg?Money card also get one per cent cashback on all purchases between £500 and £20,000, up to a value of £200 each year.