When Mr Gerhard Huber says he is "disappointed" with the collapse of the €2.4 billion (£1.89 billion) mega-merger between the Enba Group and Spanish Internet bank Unoe, it should be interpreted as a classic case of Austrian understatement. In an interview with The Irish Times Mr Huber also admits that Enba does not have enough money to fund itself through to profitability.

Barely a year ago the Salzburg-born chief executive of the Enba Group was riding the crest of the Internet wave, signing off on the biggest Irish deal of 2000 and assuming the title of e-finance executive of the year.

The deal with Uno-e, an Internet subsidiary firm of Spanish banking giant BBVA, promised a lucrative pay-off for Mr Huber and his four Enba cofounders - Mr Xavier Azalbert, Mr Peter Phillips, Mr Christian Kaiser and Mr Nicholas Malcomson.

But a lot can change in the technology world within 13 months and a combination of regulatory difficulties in Spain and the collapse of dotcom valuations worldwide led to the collapse of the tie-up some 10 days ago.

Tortuous negotiations dominated the 13-month process as Enba struggled to persuade Spanish regulators, and later BBVA, to give the deal the green light.

No stone went unturned to close the deal, according to sources close to the situation. First-e, the Internet banking arm of Enba, even appointed the same auditors as Uno-e to drive on the agreement.

Mr Huber does not want to lay the blame squarely at the door of the Spanish regulatory authorities but he believes that regulations are not yet ready to handle cross-border Internet banking deals.

"To implement what is envisaged in the European Banking Act of 1993 will take another few years. Regulators need to work out the situation before we have transparency across borders."

The merger collapse couldn't have happened at a worse time. Internet banks are out of vogue with investors and capital markets are tight. Without the funding power of BBVA behind First-e and Enba, the group faces a turbulent future.

However, Mr Huber remains optimistic and points to the benefits for the group of retaining independence. "This was such a strait-jacket that it was no good for the company, we are now free to move forward and we don't have to get bogged down in systems and people integration."

First-e, which acts like a supermarket offering customers different financial products, has some 215,000 customers in Germany and Britain. But until now it has only offered a limited product portfolio of deposit accounts and car insurance.

According to Mr Huber, this will change in the following four to six weeks as a fellow Enbaincubated firm, Dublin-based Xelector, implements its technology platforms on First-e's Internet site.

"We will not introduce our own products but rather act as intermediaries and offer our customers a selection of products," he says. "We are introducing credit cards, loans, travel insurance and utilities over the next few weeks."

Break-even is not projected until early 2003, which will put the onus on Enba's existing investors to fund ongoing operations.

"There is a close monitoring situation and they [shareholders] give you money as needed on an ongoing basis."

Mr Huber will not comment on the fate of a €100 million (£79 million) extended by BBVA to the company as part of the merger process. But it is understood that Enba is negotiating hard to obtain compensation for the failed merger.

Even if this was obtained, cost-cutting will remain vital if Enba and First-e are to cement their future.

"We were spending €1,000 to acquire each customer last year but we have reduced this to as low as €35," claims Mr Huber. "It became obvious that the bigger the marketing budget the less effective the customer acquisition was."

However, a source close to First-e told The Irish Times this week that the acquisition figures may still be in the hundreds of euros per customer and that the firm is "burning cash" at €5 million per month.

The source said Enba would soon face a crucial decision about whether to develop its First-e Internet bank strategy or scale back and become a technology supplier.

"The shareholders will be central to this decision," said the source.

However, Mr Huber remains bullish and says further job cuts are not on the cards, at least in the short term. Despite axing 69 staff and 100 contract staff last year, Enba has just been given the go-ahead to increase its headcount by 30, says Mr Huber.