Yorkshire Building Society deal means Egg is laid to rest

The society will take on Egg's mortgage and savings operations as part of the deal, which comes four months after its US owner Citi offloaded the brand's credit card business to Barclays.

Although the Yorkshire will also acquire the Egg name and its less well known Pi brand, it will not be taking on the bank's 600-strong workforce, raising fears for their jobs.

An unspecified number of staff will be retained by Citi under an outsourcing agreement with Yorkshire until the end of 2012, to help smooth the process of transferring the accounts.

The Bradford-based society has not said how much it paid for the assets, but will acquire a 2.5 billion savings book and 430 million of residential mortgages.

Once the deal completes later this year, Egg's 550,000 or so customers will become members of Yorkshire, providing they choose to retain their accounts.

The society said the savings book will enhance its funding position and capacity to lend, while boosting its product range.

Chief executive Iain Cornish said it would be a priority to provide Egg customers with a continuation of service and administration standards.

He said: "We will work closely with Egg to ensure that customers are kept fully informed throughout this transfer process."

Yorkshire, which has about 30bn worth of assets and is owned by its customers, has been on a major expansion drive in recent years, acquiring rival building societies Barnsley and Chelsea, while it is currently awaiting approval for a merger with similar-sized Norwich & Peterborough.

The group, which has 2.6 million members and 178 branches, has also been mentioned as a possible buyer of some or all of Northern Rock, the bailed-out bank put up for sale by the UK government.

Egg, one of Britain's oldest and best-known internet banks, was set up by Prudential in 1998, who sold it to Citi for 575m in 2007. The US banking giant has been selling off non-core assets since the credit crunch saw it require a government bail-out.

Citi said it was committed to working with Yorkshire on a transfer of the customer accounts, adding that the consultation process was ongoing to decide the appropriate level of staffing. Most of Egg's 600 staff are based in Derby.

It said: "The sale demonstrates Citi's continued success in reducing the assets and businesses within Citi Holdings in an economically rational manner, while working to generate long-term profitability and growth from the core businesses within Citicorp."

Citi has reduced assets by more than $500bn (310bn) since its peak in the first quarter of 2008.