Citigroup puts Egg up for sale

Marion Dakers
CITIGROUP is gearing up to sell British internet banking firm Egg, kicking off a bumper period for asset sales as banking giants across the world move to slim down.

Citi Holdings, home to the bank’s non-core operations, is believed to have plans in place for an auction to sell Egg in the next month for an estimated £500m, according to Sky News.

Egg, bought by Citigroup for £575m in 2007 when it was trying to attract UK‚Äąclients, still has around 2m banking customers in the UK. While it is held in Citi’s “bad bank” asset disposal arm, it has worked with Citi to introduce new products to enhance its profitability over the last three years. It still employs around 1,300 people in its London and Derby offices.

Virgin Money was understood to have expressed an interest in taking over Egg when it was last slated for sale in January 2009. However, Sir Richard Branson’s firm is not thought to be in the running for Egg’s latest outing.

Citigroup said it did not comment on rumours and speculation last night, but a spokesperson added: “It is already public knowledge that Egg is part of Citi Holdings. Citi’s strategy is to reduce the assets and businesses within Citi Holdings, its portfolio of non-core operating businesses and assets, in an economically rational manner while working to generate long-term profitability and growth from Citicorp, its core franchise.”

Any move to dispose of Egg would be in line with chief executive Vikram Pandit’s aim to cut back the bank’s balance sheet. He told Congress last year that his salary “should be $1 per year with no bonus until we return to profitability”.

The American group sold its private equity fund of funds last month to Lexington Partners for $5bn, in an attempt to consolidate operations.

Moves are also underway for the US government to sell off its 27 per cent stake in the bank, which is expected to rake in $30bn for the Treasury following its purchase of stock as part of the Troubled Asset Relief Programme (TARP) in 2008.

Royal Bank of Scotland is also ramping up its asset sale, which was ordered by the EU in return for its £45.5bn government bailout.

Sempra Energy confirmed yesterday it plans to sell the remaining assets in its North American commodities joint venture with RBS by the end of September.

Northern Rock is also poised to rejoin the market after the firm hinted yesterday the government may sell the beleaguered bank by the end of the year.