Virgin Money signals new move for Northern Rock

Published 24th Oct 2009

Virgin Money is applying for a banking licence as the business gears up to buy banking assets, which may be sold over the next year.

The business, part of Sir Richard Branson’s Virgin empire, fought to buy Northern Rock last year, saying at the time that it would apply for a banking licence if it acquired the bank.

The Virgin team, led by Jayne-Anne Ghadia, the former Royal Bank of Scotland banker, was on the brink of victory in February last year when the Government scrapped the sale and nationalised the lender.

Virgin has made no secret of its interest in buying Northern Rock. It may also be interested in other assets, which will be sold by Lloyds and Royal Bank of Scotland as part of the penalties imposed on the state-controlled banks by the European Commission.

The Treasury wants to divide Northern Rock into a “good” and a “bad” bank, with the aim of selling the good part. The plan needs to be signed off by the Commission. A decision is expected next week, but the timetable may slip, according to industry insiders.

Virgin Money is talking to several key figures about joining its board. Among them is Bryan Sanderson, who was chairman of Northern Rock and led an alternative bid to buy the bank.

One of the obstacles that Virgin previously faced in its negotiations with the Treasury was that officials thought its management lacked the necessary experience to take on what was then Britain’s fifth-biggest mortgage bank. Virgin tried to address that by recruiting Sir Brian Pitman, the banking veteran who used to run Lloyds TSB, to head its campaign.

Virgin Money made £24 million in profits in the year to December 31, up from £20 million the previous year, according to accounts filed this week with Companies House.

The Government wants to sell Northern Rock before the general election, expected in May or June, but Treasury sources have said that dividing the bank will take time to finalise.

Tesco may also be interested in buying Northern Rock.

Source: ' Times '

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