Bloomer must pick a good suitor for Egg

THERE has been little hard news to emerge from Prudential since its announcement in January that talks had begun on selling Egg, the internet bank in which it holds an 80% stake.

The insurance company is assessing opening bids from interested parties. But while the board of Pru, led by Jonathan Bloomer, will seek to maximise the price achieved, the board of Egg could have a dramatically different agenda.

Despite its self-deprecating advertising, Egg has established itself as a campaigning brand. It conducted much of the research that fuelled the recent backlash against Britain's credit card companies by the influential Treasury Select Committee.

And its latest report, published last month, revealed that two credit cards with identical annual percentage rates may not actually charge the same amount of interest. The new revelation so appalled committee chairman John McFall that he threatened to recall bank bosses to explain how such anomalies come about.

Egg's non-executive directors, led by respected banker Sir Derek Higgs, take the company's social responsibilities seriously. Eyebrows would be raised if MBNA Europe, the American owned credit card business, or GE Capital, which operates many of those store cards charging exorbitant rates, received Pru's backing to buy Egg. These are the companies that Egg has campaigned so fiercely against, and the internet bank's independent board could oppose such ownership unless those companies agreed to clean up their acts.

Bloomer's board is shortly expected to unveil the preferred bidder. They should be aware that the non-executive directors of Egg are likely to scramble any prospective owner they perceive as nonconsumer friendly, which, unless the bidder wishes to turn hostile, would scupper any deal.

The reign of Prudential's chief executive has been littered with disasters that even his insurance policies could not make better. If he fails to pull off this deal, it could prove one bloomer too many.

SMALL investors are returning to shares. Encouraged by the rising stock market and the onset of spring, they have skipped into their brokers and, at the present rate, are on target for more than one million orders by the end of the month.

Sadly, their timing may prove to be wrong. The dramatic slump in the FTSE in the wake of the Madrid atrocities was due not just to fear over renewed terrorist activities, but also the gradual realisation that little has changed fundamentally in the world's major economies over the past year.

America's stock market was already in decline before the bombings as investors finally woke up to the horror that is the country's trade deficit.

It hit a record $43 billion - or £24 billion - in January, indicating that America's consumers swallowed the equivalent of a small Third World country's annual output in just one month. Or more than twice the annual output of Slovenia.

But there were other signs before that shock announcement that institutional investors were beginning to shun shares. For example, Government bond yields are falling, indicating that institutions have started a massive buying spree of these safe-haven investments.

And earlier fears that massive demand from China for raw materials would inflame global inflationary pressures now appear misguided as commodity prices recently began to fall back.

Warren Buffett, arguably the world's most successful investor, recently revealed that he amassed a record cash pile of £20 billion last year, suggesting that he believes the stock market has further to fall.

The 35% rise in the FTSE over the past year rather looks like a temporary rally in a long-term bear market.