The British internet bank Egg has begun its expansion into Europe by buying the French online operation Zebank for 8m euros (�5m).

Egg immediately set itself a target of winning one million new customers in France over the next three years.

And it said it hoped the French operation would breakeven by the end of 2004.

Egg also announced new distribution deals with French retailers Sephora and La Samaritaine, and an extension to its partnership with Microsoft to offer financial products through MSN France.

Expansion plans

Egg said it would be spending �50m on branding and marketing, and �15m in development costs over the next three years.

It said it would continue with the Zebank brand in France for the time being, but that it would be introducing Egg branded products, including its credit card, into the market later in the year.

Zebank is 80% owned by Groupe Arnault, which itself is controlled by the French businessman Bernard Arnault, the chairman of luxury goods group LVMH.

The other 20% of Zebank is owned by the Franco-Belgian bank Dexia.

Zebank currently has about 70,000 customers in France, with 120,000 accounts.

In contrast Egg, which is 80% owned by the life assurer Prudential, has nearly two million users in the UK.

In early London trade, shares in Egg rose 7p to 152.5p.