Virgin Money wants £2bn for branches
Virgin Money wants to raise £2bn to fund a bid for branches being sold by taxpayer-supported Lloyds Banking Group and Northern Rock.
The fledgling finance operation, backed by billionaires Sir Richard Branson and American Wilbur Ross, is understood to have held talks with potential investors.
Lloyds is selling 600 branches following an EU competition ruling on the Government's bailout of the bank, which merged with HBOS giving it dominance over the mortgage and savings market.
Northern Rock want to sell 70 branches as it plots its return from nationalisation and into the private sector.
Virgin Money chief executive Jayne Anne Gadhia is understood to be preparing for the bid process for each estate in the summer months, in anticipation of final sales by the end of the year.
The management team is understood to want to ensure it has sufficient tier-one capital in place before making a bid.
US financier Mr Ross has already injected £100m into Virgin Money and has pledged a further £500m to be used to help buy a branch estate. In addition, it is estimated Virgin will need to raise a further £1bn to £1.5bn to fund its bids.
Other bidders for either or both estates are rumoured to include National Australia Bank, which already owns Clydesdale and Yorkshire banks and private equity firm JC Flowers.
Virgin Money is continuing with its business plans for its own new branches following the announcement it is to open four 'lounge-style' branches in London, Edinburgh, Manchester and Norwich.
The bank, which already has 3 million customers in the UK, is understood to not want to open a branch until its full suite of products is available, including deposits, current accounts and mortgages.
Richard Lloyd, executive director for conusmer group Which?, said: 'The prospect of a new high street bank is good news for consumers as competition in retail banking has really suffered since the financial crisis. If Virgin can offer genuinely competitive products this should force the existing players to up their game.
'When deciding on the sale of Northern Rock and Lloyds branches, the Government should apply a public interest test to ensure that it will genuinely benefit consumers by enhancing competition.'
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