Virgin Money continues its quest to become a bank

Sir Richard Branson’s Virgin Money has applied to the Financial Services Authority (FSA) for a banking licence, which would enable the consumer credit arm of the Virgin Group to offer deposit accounts.

The move comes at a time when consumers have lost confidence in existing High Street banks following the financial crisis and Sir Richard wants to take advantage of this, giving Virgin the opportunity to quickly gain a share of the market.

Virgin Money, which was unsuccessful in acquiring crisis-torn Northern Rock, sold its Virgin mortgage product, Virgin One, to Royal Bank of Scotland (RBS) six years ago.

Northern Rock was later taken into public ownership after attempts to find a private sector buyer fell through.

A spokesperson for Virgin Money said: “Since Northern Rock we’ve stated our ambition to become a bank, and this application is just an administrative procedure.”

Earlier this year, Sir Richard Branson announced: “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.”

In related news, supermarket giant Tesco is to expand into financial services after recently agreeing a partnership with Fortis.

Tesco already offers credit cards, savings accounts and insurance via its Tesco Personal Finance (TPF) brand and announced plans late last year that it could be offering mortgages later this year.

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