Sir Richard Branson has begun his assault on the financial industry with the purchase of a little-known private bank as a launch pad for a fully fledged business.
Virgin Money, the personal finance arm of Sir Richard’s company, is buying Somerset-based Church House Trust, which has 3000 customers and no branches, for £12.3m.
The deal is significant as it provides a short cut for Virgin to gain a full banking license and paves the way for it to offer its own mortgages and current accounts this year. Virgin Money, expected to rebrand as Virgin Bank when it launches mortgages, already provides credit cards, savings accounts, insurance and investments to 2.5m people. It plans to launch an aggressive bid for retail depositors’ money over the next few months to gather funds to lend to homebuyers.
The company is expected to launch high saving rates once the purchase of CHT has been completed. The higher rates would be aimed initially at existing customers. It is one of a number of new competitors hoping to shake up a retail banking market dominated by high street names.
Virgin Money is also considering further acquisitions in the market. It is widely touted as a potential suitor of the “good” parts of Northern Rock, although it said no discussions had yet been held with the government-owned bank. it said it would look at other opportunities, including the assets to be sold by RBS and Lloyds Banking Group over the next few years.
Virgin has wanted to enter the market since its failed takeover attempt of Northern Rock in 2007. It believes it can capitalize on a loss of trust among consumers in traditional high street banks.
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