The group said that retaining its 79% stake in the business "offers better value to shareholders" than a sale.

It added it had made the decision following an "extensive process" sparked by interest from a number of potential purchasers.

Shares in Egg stood 33p lower at 111p by 0805 GMT, while Pru was 16.75p down at 435.5p.

Sale talks

The group had had talks with a number of suitors, thought to include credit card firms MBNA and CapitalOne.

Prudential announced in January that it was in talks to sell off its majority stake in Egg, but refused to name any potential bidders.

"We had an obligation to explore all the options for the business following the approaches we received," said Pru chief executive Jonathan Bloomer.

We remain confident that Egg is well-positioned to execute our business plan successfully and deliver value to shareholders Paul Gratton, Egg Check Prudential's share price See how Egg's shares are doing

Prudential considered the sell-off as Egg ran into difficulties in France.

The company has struggled since the launch of its La Carte Egg credit card in 2002, following the purchase of French internet bank Zebank.

Customer numbers failed to meet expectations, forcing Egg to almost double its investment budget and delay a target for breaking even by a year to 2005.

French exit

That culminated in Egg posting a full-year operating loss of �89.1m in France in February, which overshadowed operating profits of �72.8m in the UK.

As a result the bank considered a strategic alliance in the country, but instead earlier this month said it was pulling out of France altogether.

The news came as Egg revealed it had cut its pre-tax losses to �4m ($7.37m) for the six months to 30 June, down from a �23m loss last year.

After news that Prudential had dropped plans to sell its stake, Egg said it would concentrate on its plans to focus on its successful UK business and plans to invest further in the brand while increasing its customer base.

"Now that the situation regarding our majority shareholder has been clarified, we remain confident that Egg is well-positioned to execute our business plan successfully and deliver value to shareholders," Egg chief executive Paul Gratton added.