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Virgin to branch out into high street banks?

Entrepreneur wants to restore confidence in banks

Virgin money logo

Sir Richard Branson has signalled his intention to turn Virgin into a high street bank within the next two years.

The entrepreneur told The Times newspaper that the lack of trust in consumer banks meant his financial services operation Virgin Money would be able to build up its market share quickly. 

He said: ‘We are going to get back into the mortgage business and we will become a bank either by acquisition or by getting our own banking licence.

‘You will see us become a consumer bank within the next couple of years.’

Virgin Money

Virgin is reportedly lobbying the government to break up Royal Bank of Scotland, which is majority-owned by the state, to increase competition in the sector.

Should parts of the bank be offered for sale, Virgin could establish itself on the high street through this route, according to the newspaper.

Sir Richard led a bid by Virgin for the now nationalised bank Northern Rock but failed to convince the treasury that it could provide the best option for taxpayers.

Market foothold

A rescue of Northern Rock would have been a transformational deal for Virgin Money and given the business a key foothold in the mortgage market and an entry in savings.

If Virgin is not able to buy up any existing banking businesses, it could build a network of branches by exploiting the falling price of leases on the high street, as recession-hit retailers close outlets or shut up shop entirely.

The division started life as Virgin Direct in 1995 and merged with online financial products supermarket virginmoney.com to become Virgin Money in 2002.

Its mortgage finance product Virgin One was taken on by the Royal Bank of Scotland the following year and Virgin’s Money’s credit card is currently on our list of Best Buys credit cards. 

© Press Association 2009

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