EGG, the direct banking arm of the Prudential, yesterday moved to stem its losses by closing its doors to new telephone customers.

The new bank, which has enjoyed explosive growth since its arrival six months ago, said it would only accept new savings over the Internet.

Egg said it had met a five-year target of winning £5 billion sterling (€7.6 billion) of savings and 500,000 customers in just six months. But it repeated a previous estimate of this year's losses at £100 million.

The bank said it believed it could still grow rapidly, and it aims to win two million Internet customers in the next five years. The Pru's shares rose 30p to 870p yesterday.

Sir Peter Davis, Prudential chief executive, said: "Our figures demonstrate that the e-commerce revolution in financial services is already under way."

The Egg savings account, which pays 6 per cent gross interest, regularly features in best-buy tables. The rate is 0.75 percentage points above base rates.

Mr Mike Harris, Egg chief executive, said the savings inflow would have grown to £14 billion to £15 billion by the end of this year without action to choke off demand.

New customers will not be able to apply by phone, whether they have Internet access or not. "We will probably get a bit of flak," he said.

Mr Harris sought to make a virtue out of the Internet's increasing popularity, saying costs could be as much as four times lower than telephone transactions and 10 times lower than high street branches.

Even smaller and more traditional competitors have found the Internet's lower costs allow them to cut prices.