Yorkshire Building Society deal means Egg is laid to rest

Yorkshire Building Society swallowed the remains of Egg Bankingyesterday in a move that spells the end of the internet bank as astand-alone entity.The society will take on Egg's mortgage andsavings operations as part of the deal, which comes four monthsafter its US owner Citi offloaded the brand's credit card businessto Barclays.Although the Yorkshire will also acquire the Egg nameand its less well known Pi brand, it will not be taking on thebank's 600-strong workforce, raising fears for their jobs.Anunspecified number of staff will be retained by Citi under anoutsourcing agreement with Yorkshire until the end of 2012, to helpsmooth the process of transferring the accounts.The Bradford-basedsociety has not said how much it paid for the assets, but willacquire a GBP2.5 billion savings book and GBP430 million ofresidential mortgages.Once the deal completes later this year, Egg's550,000 or so customers will become members of Yorkshire, providingthey choose to retain their accounts.The society said the savingsbook will enhance its funding position and capacity to lend, whileboosting its product range.Chief executive Iain Cornish said itwould be a priority to provide Egg customers with a continuation ofservice and administration standards.He said: "We will work closelywith Egg to ensure that customers are kept fully informed throughoutthis transfer process."Yorkshire, which has about GBP30bn worth ofassets and is owned by its customers, has been on a major expansiondrive in recent years, acquiring rival building societies Barnsleyand Chelsea, while it is currently awaiting approval for a mergerwith similar-sized Norwich & Peterborough.The group, which has 2.6million members and 178 branches, has also been mentioned as apossible buyer of some or all of Northern Rock, the bailed-out bankput up for sale by the UK government.Egg, one of Britain's oldestand best-known internet banks, was set up by Prudential in 1998, whosold it to Citi for GBP575m in 2007. The US banking giant has beenselling off non-core assets since the credit crunch saw it require agovernment bail-out.Citi said it was committed to working withYorkshire on a transfer of the customer accounts, adding that theconsultation process was ongoing to decide the appropriate level ofstaffing. Most of Egg's 600 staff are based in Derby.It said: "Thesale demonstrates Citi's continued success in reducing the assetsand businesses within Citi Holdings in an economically rationalmanner, while working to generate long-term profitability and growthfrom the core businesses within Citicorp."Citi has reduced assets bymore than dollars 500bn (GBP310bn) since its peak in the firstquarter of 2008.