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Internet bank Egg cancels 160,000 credit agreements

British Internet bank Egg said on Saturday it was terminating about 160,000 customers' credit card agreements, saying their credit profiles had deteriorated.

A British lawmaker called the move unfair, and said Egg's decision should be investigated.

Egg Banking PLC was bought by Citigroup Inc last year, and the company said the move was the result of a "one-off, extensive risk review of our book" after the acquisition.

The figure represents about 7 percent of Egg's credit card customers.

"Egg has given a number of its credit-card customers 35 days' notice that it is ending their card agreements," the bank said in a statement.

Egg said its customers would still be able to repay their balances, either monthly or in full.

Egg, one of the most successful Internet-only banks in the world, was bought from British insurer Prudential PLC by Citigroup for more than US$1 billion in May.

It now forms part of Citigroup's UK consumer unit.

Citigroup and other top banks began reporting huge losses stemming from a mortgage and credit crisis last fall, and funds from the United Arab Emirates, Kuwait, South Korea and China have sunk billions of dollars into US and European banks facing such problems.

Nigel Griffiths, a governing Labour Party legislator, on Saturday criticized Egg's decision as unfair to some of its customers and called on Britain's Financial Services Authority to investigate the move.

The authority is an independent body that regulates the financial services industry in Britain.

In an interview with BBC TV, Griffiths said that there had been "a flood of complaints" from Egg card holders who had paid for independent credit rating checks that found they were good customers.

"Of course, no one should be forced to give credit to anyone. In fact, I've accused this industry of too easily giving credit in the past and not making proper checks," the Scottish legislator said.

"But in this case they seem to be almost indiscriminately taking people off their books and there is a strong suspicion that these are people who -- because they don't actually get into debt and start paying high monthly interest charges -- may not be the most highly profitable customers and they're being cleared off the books," Griffiths said.
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