Egg

» see egg.com as it lived, on the wayback machine

~ the last words ~

i have never held a British bank account, so Egg is here for the shape of it rather than for anything i did with it. The shape is worth having. In 1998 the idea that a bank could be a website was still an argument people were having, and Egg is the one that settled it in Britain by taking in more money than it could handle.

It launched on 11 October 1998 out of Prudential's banking arm, which had been running under the Prudential name and needed something that did not sound like a life insurer. The offer was simple and expensive: eight percent on savings, which was above the base rate, available to anyone with a phone or a browser. Prudential had planned on five billion pounds of deposits over five years. It got past six billion in ten months, and paying above-market interest on that much money cost it around a hundred and fifty million pounds in the first year alone.

The losses were the point, up to a point. Egg was buying a customer base at a loss on the assumption it could sell those people other things later. It largely could. Over two million customers came through and the brand turned into a genuine consumer name rather than a Prudential subsidiary. In June 2000, near the top of the market, 21 percent of the company was floated on the London Stock Exchange.

~ the record ~

~ how it landed ~

The Egg Card is what most people actually remember. It launched in 1999 as the first credit card in Britain to offer zero percent interest on new purchases as well as on balance transfers, which sounds unremarkable now because everybody copied it. At the time it rewired how British consumers thought about credit cards, from a thing you owned to a thing you switched every few months to keep the free money running.

Egg also tried France, launching there in 2002 with the same playbook and a large budget behind it. It did not work. French consumers did not switch banks the way British ones did, and the losses ran into the hundreds of millions. By late 2004 the operation had been broken up, with the savings and brokerage accounts going to ING Direct France. That failure is the reason Prudential started looking for a buyer at all.

~ the fall ~

Citigroup agreed to buy Egg on 29 January 2007 for £575 million and completed on 1 May. In February 2008 the new owner wrote to about 161,000 cardholders, seven percent of the book, and told them their accounts were being closed for risk reasons. A very large number of the people who got that letter had never missed a payment. The widely believed explanation, which Egg denied, was that they had been identified as customers who always cleared their balance and therefore never paid any interest.

It was a bad look and it did lasting damage, because the whole proposition had been that this bank was on your side in a way the high street was not. In December 2008 the FSA fined Egg £721,000 for persistent misselling of payment protection insurance on card applications, which finished the argument. The internet bank was now just a bank, with the same complaints file as everyone else.

~ what it became ~

Citigroup took Egg apart rather than closing it. Barclaycard bought the credit card accounts in March 2011. Yorkshire Building Society bought the savings and mortgage business in July, which was the point at which nothing recognizable as Egg was left running. The legal entity, Egg Banking plc, stayed with Citigroup to handle the PPI claims and was renamed Canada Square Operations, a name chosen so that nobody would recognize it.

The brand itself never quite died, which is the odd ending. Egg survives as a trading name of Yorkshire Building Society, a mutual in Bradford that is roughly the opposite of what Egg was set up to be. The thing it actually left behind is the assumption every British bank now works from, that the branch is optional and the website is the bank.

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