Pru denies Egg interest has ebbed

PRUDENTIAL chief executive Jonathan Bloomer today sought to allay concerns that the insurance giant's sale of its stake in online bank Egg was heading off the rails amid fears bidders were losing interest.

Bloomer insisted that any sale of Pru's 79% stake in Egg was always going to take time and that it would have to tell the stock market if interested parties had withdrawn from the auction process.

His comments came after reports Egg is putting back its annual general meeting, usually held in April or May, until the summer to allow Prudential to revive talks.

It kick-started the auction in January by announcing it had received an approach. This is believed to have come from Royal Bank of Scotland. The stake, worth £1.6bn in January, is now valued at £1bn.

Bloomer said: 'These things take a very long time and Egg is a unique business. For people to look at it properly and understand the business model is always going to take time.

'I think it would be silly to have an annual general meeting at this time. It makes perfect-sense not to have one in the middle of this process.'

Egg's shares eased 3/4p to 153 1/2p today despite first-quarter figures that showed a reduction of its losses after another solid performance from its UK operation and a cut in spending at its loss-making French unit.

Prudential fell 5p to 460 1/2p despite new-business results that beat even the most optimistic analyst expectations. Group new-business sales for the three months to March rose 6% to £433m on the industry standard annual premium equivalent basis, against a City consensus forecast of £417m.

Sales in the UK rose 9% against the first quarter a year ago to £186m, the highest figure for more than a year. There was a year-on-year drop of 27% in the final quarter of 2003. But analysts said that beyond the headlines, the figures were less encouraging. Growth in the US, of 16%, was largely down to strong sales of bulk-volume, low-margin products.

The overall loss before tax at Egg shrank to £4.9m in the first quarter from £15.7m in the same period last year. The UK operation boasted a net 148,000 new customers and a profits contribution of £15.2m.