Financial News

  • 7 December 2012, 7:06

Virgin Eyes 1bn Credit Cards Deal

Sir Richard Branson's banking arm has resurrected talks to buy a 1bn credit card book from a Wall Street giant as it accelerates its challenge to Britain's major high street lenders.

I understand that Virgin Money is in detailed talks to buy part of MBNA's UK portfolio, which is owned by Bank of America (BoA), one of the world's largest banks by assets.The talks, which stalled earlier in the year when BoA aborted an auction of its entire UK business, are understood to have been revived several weeks ago and have gained momentum since then.

An announcement about a deal, which would be subject to approvals from UK and US regulators, is likely to be made in the next few months. It is unclear exactly how much Virgin Money will pay to acquire the portfolio.

If it gets completed, the transaction would continue the aggressive expansion of Virgin Money's business under Jayne-Anne Gadhia, its chief executive.

Last year, it secured a deal to buy Northern Rock from British taxpayers, four years after it was forced to rely on funding from the Bank of England to keep it from collapsing.

In July, it bought a 465m mortgage portfolio from UK Asset Resolution, the taxpayer-owned holding company for Northern Rock's 'bad bank' and Bradford & Bingley.

"The transaction enables Virgin Money to deploy some of its excess liquidity to grow its mortgage book with high quality loans that complement the existing book structure," the bank said at the time. "The acquisition does not change Virgin Money's organic growth plans or its stated target of providing 45 billion of new lending between 2012 and 2017."

BoA has already offloaded a cluster of businesses, including 200m of business loans to Barclays, and its Irish credit card portfolio to Apollo Global Management, a US investment firm.

The American bank will also seek to exit the remainder of its UK business, which comprises receivables valued at several billion pounds.

Virgin Money and BoA both declined to comment.

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