The Virgin boss is bidding for Northern Rock and 600 branches of Lloyds which are expected to be up for sale next month
Sir Richard Branson is preparing to make multibillion-pound parallel bids for Northern Rock and 600 branches of Lloyds Banking Group in a move that would catapult his Virgin Money brand on to the UK's high streets. In echoes of the way his Virgin empire took on the airline industry, Virgin Money intends to add a "bit of glamour" to high street banking.
In an interview with the Guardian, Jayne-Anne Gadhia, chief executive of Virgin Money, said the ambitious group would bid for both businesses, likely to be put on the market next month.
On Thursday night Gadhia was putting the finishing touches to presentations to investors who she hopes will provide a �3bn war chest to fund the potential acquisitions.
The board of Northern Rock, chaired by Ron Sandler, is understood to have met on Thursday to discuss proposals set out by City advisers Deutsche Bank to extricate the bank from taxpayer ownership.
Lloyds is being forced to sell 600 branches to appease European rules on state aid following its taxpayer bailout and is keen to execute a sale after the independent banking commission ? due to make its final report in September ? suggested even more should be sold off.
Gadhia said Virgin Money, which tried to buy Northern Rock before it was nationalised in February 2008, wanted to be in the initial running for both outlets. Branson met Lloyds boss Ant�nio-Horta Os�rio this week to discuss a bid. "We want to make sure that certainly, in round one, we are in both," she said. "Does that mean in the end we would end up buying both? We have to realistic," she said.Once Virgin has ploughed through all the financial information released by the banks, it seems more likely to chose between two. "We'll choose based on rational economics and do-ability."
She sees the Lloyds branches as a "once in a generation opportunity" to acquire a near-5% share of the nation's current accounts, a market in which Virgin aspires to be a major player. The purchase of Northern Rock would accelerate the group's plans to open 70 branches within five years.
The business began life in 1994 when Virgin signed a deal with the then insurer Norwich Union largely as a savings operation. It aspires to launch savings and mortgages this year through the Church House Trust bank brand initially. Current accounts are scheduled for early 2012 ? a little later than rivals had expected. "By the end of 2012 I'm really confident we will have a full product range, branded Virgin even if we aren't successful with the acquisitions," said Gadhia.
Four "lounge-style banks" are planned first, earmarked for Edinburgh, Manchester, Norwich ? where the group was founded ? and London by the end of the year.
The ultimate decision on whether to sell Northern Rock ? or return it to the mutual sector it left in 1997 ? will be taken by the chancellor, George Osborne, on the advice of UK Financial Investments, which looks after the taxpayer stakes in the bailed-out banks. Northern Rock and UKFI would not comment on Thursday night.
Source: http://www.guardian.co.uk/uk/2011/may/26/richard-branson-virgin-high-street
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