Fidelity has cracked an egg to build its U.K.-based investment business. This morning Egg CEO Paul Gratton confirmed that the British Internet bank will sell its investment unit to Boston-based Fidelity for 3 million pounds.
London-based Egg, which began as an Internet bank during the dotcom bubble and is 79 percent owned by Prudential PLC (no relation to the U.S. Prudential), appears to be focusing on its retail banking business. It announced the sale of the investment management unit during its regular earnings conference call this morning. During the same call, Egg executives also detailed the bank's plans to close its unit based in France.
The strategic moves come as Egg reported a $120 million loss for its most recent quarter. However, its U.K. business reported a pretax profit of 18.6 million pounds for the quarter (below the 20 million pounds the year prior) and that it gained 105,000 new customers to bring its total to 3.6 million.
By selling its investment unit, Gratton said that Egg will be able to boost its annual profit by roughly 3 million pounds. That amount is roughly the same as the sale price, implying that Egg had been unable to achieve any scale in its business.
Fidelity already operates a London-based investment management business.
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