London Briefing/Fiona Walsh:As U-turns go, Prudential's decision to sell its internet banking business, Egg, is a pretty spectacular example.
Little more than a month ago, the UK insurance group rejected a £950 million (€1.4 billion) offer for Egg from US financial services giant Citigroup. Yet on Monday, Prudential accepted a new bid from Citigroup worth just £575 million.
Not surprisingly, the volte face by Prudential chief executive Mark Tucker caught the City on the hop. Just how does a business "lose" more than one-third of its value in the space of a few weeks?
A shocking performance from Egg over the past year goes a long way to explain the change of strategy. Unveiling the deal on Monday, Mr Tucker revealed the internet banking business has clocked up operating losses of £145 million over the past 12 months, hit by spiralling bad debts and a slowdown in consumer lending.
It was all so different when Egg, a pioneer of online banking in Britain, was launched in late 1998. Amid a blaze of publicity - not least because of its rather odd name - it swiftly lured customers from high-street rivals with the offer of market-beating interest rates.
It gave Prudential an unaccustomed street-cred in the exciting new online world and in some circles Egg was talked of excitedly as "another Amazon".
In the space of just a few months, it had captured more customers than it had forecast for the entire first few years of its operation. And those customers were every financial services group's dream - because Egg was aimed at online users, its account holders were younger and more technologically-savvy than the usual run of bank customers.
That was before the dotcom bubble burst. The loss-leading rates used to lure customers were unsustainable and, although Egg has three million customers and a 7 per cent share of the UK credit card market, profits have proved elusive.
The sale to Citigroup is not the first time Prudential has reversed its strategy over Egg. It floated a 21 per cent stake in the business in 2000, only to see the then chief executive Jonathan Bloomer lose his job over a failed attempt to sell the remaining 79 per cent stake in 2004. Mr Tucker, his successor, bought back the original 21 per cent stake a year ago, paying £211 million in a deal that valued the Egg's operations at £1 billion.
Despite the shrinking sale price, Mr Tucker's decision to offload Egg was greeted with relief in the market. The sale comes as Prudential chief executive's strategy remains under close scrutiny, following his decision last year to reject a £17 billion offer for the Pru from rival Aviva.
Meanwhile, new business figures for the rest of the group, reported alongside the Egg deal, make for uninspiring reading. Its core UK operations showed barely any growth last year and doubts remain over the future of its domestic operations.
There have even been suggestions that it could be considering offloading the UK side in a move that would represent a huge historic break for the group and could be worth as much as £7 billion. Mr Tucker was giving no clues on Monday, but promised an update on strategy by mid- March.
As always, one company's disaster is another's opportunity. Citigroup is delighted with the deal, which it says will quadruple its UK customer base. It intends to use Egg as the model to expand its online banking operations around the world.
While no doubt relieved to have offloaded the business, Mr Tucker must be hoping Citigroup does not make too much of a success of Egg or at least not too quickly. That really would make the Pru look bad.
Debt sector's woes
On the subject of shrinking prices, last week saw a shake-out in the debt management industry on the back of two shock profit warnings.
With personal insolvencies in Britain reaching record levels on the back of the explosion in consumer debt, there has been a boom in business for companies offering what they call "debt solutions". This means someone unable to pay what they owe will take out an Individual Voluntary Arrangement (IVA), which is a sort of halfway house to bankruptcy and under which their debts are reorganised. Such schemes were often advertised as enabling consumers to "escape" as much as 90 per cent of their debts.
But now the banks and credit card companies, hit by spiralling bad debts, have started to toughen up their debt reorganisation terms. At the same time, the easy money to be made out of other people's debt problems has sparked fierce competition in the industry, all of which comes as the authorities threaten to tighten up regulation of IVA providers, many of whom have targeted the debt-laden with hard-sell television advertisements.
The boom times look to be over for the debt specialists. Shares in the sector have collapsed more than 30 per cent as profit warnings from two leading players, Debt Free Direct and Accuma, finally burst the bubble.
It does not mean that Britain's mounting debt problems are over. But it is going to become harder for those who have fallen too far into debt to walk away quite so unscathed in the future.
Fiona Walsh writes for the Guardian newspaper in London
