Prudential has stunned the City by selling its Egg direct banking arm to Citigroup for £575m.
The move casts doubt on the advertising pitch called by Prudential late last year to consolidate its advertising for the Pru, Egg and its M&G Investments arm.
The decision to sell the troubled banking arm is a u-turn by chief executive Mark Tucker who had abandoned previous attempts to offload the business. A year†ago Prudential bought back the shares in Egg it didn’t own and began efforts to consolidate the businesses.
Tucker admits that trading has worsened at Egg in recent months and that the business is now expected to suffer operating losses of £145m for the year to the end of 2006.
Citigroup is the world’s largest credit card issuer. Tucker says it sees "enormous opportunities to develop Egg’s business in the UK". Egg was set up by the Pru in October 1998 and provides banking and financial services products via the internet and telephone.
Tucker plans to update the market with further details by March 15.
A Pru spokesman says it is "too early to say" what effect the sale will have on the ongoing advertising pitch or its marketing arrangements.
Last week Mother, which handles Egg’s advertising, was knocked out of the consolidation pitch.