French blow puts a crack in Egg

INTERNET bank Egg has admitted its sales in France are still disappointing, while the core UK business continues to prosper.

Reporting a slide from £1.2m profits last time to a £22.8m first-half loss, chief executive Paul Gratton said volumes in France had been 'slower than expected'.

He also appeared to hint that Egg might be prepared to cut back on its planned e300m (£213m) planned investment in France if the business did not show more promising signs. 'We continue to monitor closely our performance having regard to our planned $300m profit-and-loss investment,' he said.

Losses in France ballooned from £5.5m to £48.7m as Egg rolled out an aggressive marketing campaign. Brand awareness was now 'a very creditable 77%'.

UK profits soared from £11.6m to £36.7m, with an extra 340,000 customers signing up for credit cards and other products, taking the total to 2.9m.

In April, Egg warned that the French offshoot would cost more than the originally planned e160m and would take longer to move into the black. Break-even would come in 2004, not next year as originally planned.

Egg has come under fire in France, accused of misleading customers, unilaterally closing some people's accounts and running a tasteless advertising campaign.