After much speculation, Prudential has now announced that their internet bank, Egg is up for sale. Prudential owns a 79% share in Egg and has decided to auction it off, citing value for shareholders as the reason.
Our View
The internet is yet to have its day and making a mainly internet based business pay at the moment is very expensive.
In our view, Prudential would be wise not to sell its shares in Egg but hold back on the expensive advertising until more people are ready for online business. Internet banking is a cut-throat market and you are only as good as your advertised rate and brand with the consumer.
We believe that the majority of consumers are still not ready for the full on line commitment but will be in the years to come. Prudential has obviously taken a business decision that the money raised will be more profitable elsewhere.