Virgin Money buys into retail banking
LONDON (Reuters) - Richard Branson's Virgin Money is set to enter Britain's retail banking market, spending 50 million pounds on a tiny provincial bank with the licence needed to sell savings and mortgage products.
The consumer credit arm of Branson's Virgin Group said on Friday it had agreed to buy Church House Trust in a deal that values the bank, based in the west of England, at about 12.28 million pounds.
Virgin will inject an additional 37.3 million pounds of new capital into Church House, a private bank founded in 1978 by a West Country family of solicitors with ties to the banking industry that go back to 1792.
Britain's Financial Services Authority (FSA), which assesses the fitness of anybody buying a bank and can block such deals, has approved Virgin's application to become the controlling shareholder Church House, Virgin Money said.
Branson, who is the country's 32nd richest person with an estimated fortune of 1.2 billion pounds according to the Sunday Times 2009 Rich List, has made no secret of his wish to find a springboard to launch him into Britain's banking sector and capitalise on the woes of a badly shaken industry.
"The Church House Trust business offers us a strong platform for growth," Branson said in a statement. "Virgin Money aims to bring simplicity to the UK banking market which has traditionally been a complex sector."
Sources told Reuters earlier this week that Virgin Money was close to announcing an acquisition that could make it the first high-profile arrival in the sector since the onset of the financial crisis.
ASSETS ON THE BLOCK
Virgin, which simply lends its brand to financial services products that are actually provided by the likes of Royal Bank of Scotland (RBS.L) and The Co-operative Bank, wants a banking licence so that it can become a fully fledged player.
It has been pursuing a number of avenues, including applying to the FSA in October for its own banking licence and a failed approach for Northern Rock, Britain's first victim of the global banking crisis.
Virgin is frequently named as a potential suitor for a slice of the billions of pounds in UK banking assets set to be put on the block over the coming months and years, including making another approach for failed mortgage lender Northern Rock.
Other possible acquirers of UK banking assets include National Australia Bank (NAB.AX), which says it is actively considering UK opportunities, retailer Tesco (TSCO.L) and Spain's Santander (SAN.MC), owner of Abbey.
Brazil's Itau Unibanco (ITUB4.SA) (ITUB.N) has also been named as a potential new entrant, and is reported to be interested in stakes in Royal Bank of Scotland and Lloyds (LLOY.L) held by the government.
Other new arrivals expected this year include Metro Bank, a start-up from U.S. entrepreneur Vernon Hill, and a bank backed by UK stockbroker Panmure Gordon (PMR.L). Both are awaiting FSA approval.
Virgin Money said it had already received acceptances in respect of 65.8 percent of Church House shares.
Quayle Munro Limited is acting as financial adviser to Virgin Money while Europa Partners Limited is acting as financial adviser to Church House Trust. (Additional reporting by Myles Neligan and Simon Jessop; Editing by Sharon Lindores)
- Tweet this
- Share this
- Digg this