Could Citi be targeting Lloyds?

A recent report confirmed that the Citigroup had struck a deal with the UK's Prudential to purchase the online banking branch of the financial giant, Egg – a deal that is expected to be sealed in around April and will cost five hundred and seventy five million pounds. This move will give Citigroup a six percent share of the UK's credit market, boosting its current customer base of under one million to over four million, with customers that have a wide range of services, from banking and savings to credit cards, loans, mortgages, and investments.

The chairman of Citigroup stated earlier this week: "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. "Prudential Chief Executive Mark Tucker added: "The sale of Egg to Citigroup realizes greater value for our shareholders than retaining the business within the group. Citigroup is the largest credit card issuer in the world and sees enormous opportunities to develop Egg' business in the U.K. "

At present Citigroup has a handful of high street branches and around one hundred finance shops dotted around the UK. The group also offers its own Citi credit card and credit cards through the Diners Group, along with mortgages under the umbrella of Future Mortgages. Therefore the acquisition of Egg will boost its financial presence in the UK considerably.

And just as the deal with Prudential with regards to the purchase of Egg has been confirmed by Citigroup, there are now rumours that the group may be planning another acquisition that could put it amongst the major financial players in the UK, with rumours regarding the possible purchase of Lloyds TSB. According to the speculation, of which there has yet been no confirmation, Citigroup could be planning a bid for the banking giant, valued at thirty three billion pounds.

Tom Smith
12th February 2007

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