could bid for
British online bank called Egg, according to a
If Barclays wins the bid it plans to merge the online bank with its Barclaycard and mortgage operations, industry watchers argue.
"That would make sense. I could see that because they would want to preserve the UK nature of the company. Plus, there is a difference between being acquired by a bank and being acquired by a PE firm," said Roman Regelman, a partner of Booz & Company's Financial Services Practice.
Regelman said that interest from TPG and Blackstone are not surprising as more private equity firms are looking at acquiring underperforming assets in the financial sector.
Blackstone has supposedly partnered with specialist credit card provider SAV Credit on the bid and may merge Egg with SAV Credit. SAV Credit also acquired Citi's branded British credit card portfolio earlier this year, according to published reports.
Citigroup bought the unit from Prudential in May 2007 for $867 million and is selling the online bank in an effort to reduce non-core assets. Regelman said that it is unlikely that the bids will come in with a valuation near what Citi paid for the asset.
"Citi may be selling it for cheaper because they want to get rid of it and it is very heavy on credit operations," Regelman said. Regelman said that Egg's long history of underperforming would also play a factor.
Citigroup, TPG, Blackstone and Barclays declined to comment.
--Written by Maria Woehr in New York.
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