Virgin Penetrates Retail Banking Market
News | January 14, 2010 at 1:20 amSir Richard Branson takes another commercial leap and attempts to become one of the key banking service provider in UK by giving a nod to buy the Church House Trust, a petite local private lender in UK. The acceptance of this deal by Financial Services Authority will endow Virgin Money with a banking license, much needed to offer full range of financial products to their customers.
After the completion of the acquisition process, Virgin Money plans to nurture its banking business geologically. Currently, Virgin Money offers personal financial services like insurance, pension schemes, and retail credit cards. After acquiring Church House Trust, it will obtain the right to receive money from depositors and lend mortgages.
Royal Bank of Scotland and Lloyds has informed that they will divest. However, Virgin can still buy further assets. And buying Northern Rock this time is quite possible. At least that’s the meaning one can derive from the offer document, 
which mentions that they might consider acquiring another company after this one.
Merely by offering investment products, credit cards, savings, and insurance, Virgin Money is catering to 2.5 million customers. The government believes that the acquisition of rights to deposit and lend money will definitely help Sir Richard Branson to grow the financial hand.
Virgin Money will pay around £12.3 million from its funds, while the other £37.3 million will be raised as fresh capital. Two-thirds of the shareholders of trust are ready to sell their shares to the Virgin’s financial firm.
Church House Trust was established in 1987 and is located in Yeovil, Leeds, and Somerset. However, it is formed from a company which was found by a renowned West Country solicitor named Edmund Batten in 18th Century.
According to Virgin Money, acquiring Church House Trust is a lucrative preposition as its deposits are much more than double its lending. This ensures that it is not much vulnerable as it doesn’t depend on external funding.
Operating profit, as per 2008 books of accounts, is recorded as £4.05 million and profit before tax was £450,000. The trust was operated in a conservative model and it will, according to Chairman David Batten, provide a strong foundation for Virgin to penetrate the retail market.
For Branson, this is an ideal time to commence a financial firm and benefit from the disintegration of giant banks. Probably, Virgin Money will be transformed as Virgin Bank after the acquisition and they expect online banking to be one of the key areas of their service.
Predictions of analysts coupled with views of Kevin Mountford, Banking Head at moneysupermarket.com, are quite optimistic. According to them, Virgin will establish itself as a reliable and significant brand in the retail banking sector. We will see a lot of innovative and aggressive strategies like the successful promotion of its credit cards with best buy.
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Virgin now in banking! thats sound something interesting! Airways, mobile service provider and now banker!
Sir Richard Branson hats off to you! what a diversify line of taking banking sector!
Virgin already has success in its mobile service provider and now banking. It has already got its customers in line.