Citigroup to Buy World's Biggest Online Bank for $1.13 billion

Citigroup today announced it has reached an agreement to acquire 100% ownership of Egg Banking plc (Egg), the world’s largest pure online bank and one of the UK’s leading online financial services providers, from Prudential PLC for £575 million, or approximately $1.127 billion*, in cash, subject to adjustments at closing. The transaction is expected to be accretive in its first year.

The purchase includes over three million Egg customers, and products and services including online payment and account aggregation services, credit cards, personal loans, savings accounts, mortgages, insurance, and investments. Since its launch in 1998, Egg has built a loyal customer base and established a reputation for innovative products and service, complemented by strong online distribution capabilities and brand recognition. Citigroup intends to build on those relationships, including the use of the Egg brand.

Combining Egg and Citigroup’s UK Consumer operations will create a broad-spectrum consumer financial services provider with over four million customers, more than quadrupling Citigroup’s 800,000 UK credit card base by adding Egg’s approximately 2.9 million credit card customers. Citigroup will explore synergy opportunities to ensure that customers get the best from both companies, including Egg’s outstanding online platform and customer service, Citigroup’s global banking capabilities, and a market-leading product set.

Ajay Banga, Chairman and CEO of Citigroup Global Consumer Group – International, said: “Egg is an excellent strategic fit with our business and we are excited to have the opportunity through this acquisition to broaden our international Consumer banking business, and make our products and services available to more people around the world. We also will be able to learn from Egg’s successful direct banking platform to enhance our global offerings.”

George Awad, CEO, Citigroup Global Consumer Group, Europe, Middle East and Africa, said: “We like Egg’s brand; we like Egg’s platform; we like Egg’s customer engagement model; and we like Egg’s customer set. This is a terrific acquisition for Citigroup, because it provides us meaningful scale in consumer financial services in the UK, a key strategic market, and enables us to enhance the value proposition for customers. We will deliver growth by combining Egg’s leading edge online products and distribution with Citigroup’s global banking expertise and scale. We look forward to working with the team at Egg.”

Citigroup’s UK Consumer business today serves over one million customers primarily in the wealth management and near prime lending markets, and offers current, savings, and foreign currency accounts, credit cards, investments, offshore banking, personal loans, and mortgages. It has five retail bank branches, 100 consumer finance branches and offers 24/7 online and telephone banking.

The acquisition is consistent with Citigroup’s strategic growth plans for the UK, and cements Citigroup’s position as a significant player in the UK personal financial services market. In December 2006, Citigroup Global Wealth Management announced the acquisition of Quilter, one of the UK’s most respected wealth advisory firms.

Citigroup has a Consumer banking presence in 27 countries in the Europe, Middle East and Africa (EMEA) region, with strong loans, cards and wealth management franchises, a workforce of more than 32,000 staff, over 1,000 branches, 106 sales centers and over 17 million customer accounts, including its UK Consumer business.

The transaction is expected to close in the next 60-90 days and is subject to regulatory approvals. Citigroup Corporate and Investment Banking was the sole advisor to Citigroup on this transaction.

*Exchange rate calculated at £1.00 = US $1.96