Wednesday, 27 February 2008

Egg dumps millionaires

Egg, the online bank, who dumped 161 000 customers last month has also dumped at least three millionaires as Egg considered them a bad credit risk. Egg purged its books of people it feared might fail to pay their bills.

AA correspondent said that one of the millionaires’ gross income last year was £1.1million and that he had worked for one of Britain's 50 largest companies for 26 years. The millionaire said “My credit rating is excellent and I even happen to have shares worth £180,000 in a Citigroup account. I find it outrageous that this bank can make these statements and get away with it.”

Egg, which was set up by Prudential, the UK insurer, was bought by Citigroup, the US banking giant, last May. Egg said that Citigroup immediately began combing through its 2.3 million customer base for bad credit risks. The bank wrote to 161,000 customers last month to tell them that their cards would be cancelled in 35 days' time because they presented a “higher than acceptable risk profile”.

A spokesman for Egg said yesterday that it did not look solely at credit histories when deciding whether to cut off customers. “Some customers may be up-to-date with payments and have a good record with the credit agencies but our models might show them to pose a higher future risk than we're comfortable with,” the spokesman said.

The spokesman denied that Egg had shed customers who paid off their card every month because they were not profitable. “Profitability is not a factor in our decision,” he said. Egg does not receive interest from these customers but it does receive a fee from every transaction.

Customers aged between 34 and 49 are most likely to have their credit limits cut or their cards cancelled, the website found, while borrowers younger than 25 who have very little credit history and no property are more likely to have their limits extended. (source: Timesonline)

Google, the internet giant, suffered a 7% decline in adverts viewed in January, compared with the month before. Google shares have fallen nearly 19% in the past three months. Analysts said yesterday that despite this fall, web searches had increased 10% in the same period.

Benjamin Schachter, a UBS analyst, cut his 12-month target on Google shares from $650 to $590, a new low among Wall Street analysts. He said that international growth, including in Britain, Google’s second-largest market, was a concern. Shares in Google tumbled as low as $446.85 (£231), down $39.59 (£20.5), or 8.1%, in early trading on Nasdaq, but recovered later to close at $464.19 (£240.5), a fall of $22.25 (£11.5), or 4.57%.

Nevertheless, 29 brokers are still advising investors to continue to buy Google shares, while only four rate it as a “hold”. (source: Timesonline)

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