Financial News

  • 27 January 2014, 15:19

Virgin Money Spears New Director Before Float

Sir Richard Branson's banking arm is appointing a former Deutsche Bank executive as part of a move to strengthen its board ahead of a medium-term stock market listing.

Sky News understands that Virgin Money will this week name Marilyn Spearing as a non-executive director, joining a board populated by heavyweight City figures such as Sir David Clementi, the bank's chairman.

Ms Spearing, who will attend her first board meeting this week, has also worked for Barclays and HSBC, principally in areas such as payments and cash management.

Her arrival will come as Virgin Money prepares to mount an assault on the UK current account market against a backdrop of growing political hostility to the dominance of the country's five major high street lenders.

Ed Miliband, the Labour leader, will ask competition regulators to recommend a legal market share cap for banks if he wins the next general election, which he argues would pave the way for the likes of Virgin Money to mount a more effective challenge.

Jayne-Anne Gadhia, the Virgin Money chief executive, recently began trialling a current account among the bank's staff, with early indications understood to have been positive.

The planned public launch of the product later this year could mark a potentially-significant phase in efforts to bolster competition in the current account market.

More than 80% of accounts are supplied by the five biggest lenders: the state-backed Lloyds Banking Group, owner of HBOS, and Royal Bank of Scotland, which owns NatWest; Barclays, HSBC and Santander UK.

Once the staff trial has been completed, Virgin Money will target consumers who are underserved by the major lenders, offering a basic account with no fees or charges and free access to the UK ATM network of cash machines.

It is also likely to be aided by the new seven-day switching system for current account providers which came into effect during the autumn.

Barclays and the Co-operative Bank are among those which have seen net losses of customers, the latter as a result of the adverse publicity over its 1.5bn capital hole and allegations about the behaviour of its former chairman, Paul Flowers.

During the last year, Virgin Money sold more than 1.5 million new products to customers, having established a significant market share in loans, insurance and savings.

Its takeover of Northern Rock in 2011 was a crucial moment in its expansion, but the length of time between that deal and the current account launch reflects both Virgin Money's determination to develop the right products and the pitfalls of associating its brand with the poor service that has blighted British banking.

Sir Richard is targeting a stock market listing of the bank within a couple of years, although a firm date has not yet been decided.

Aldermore, Metro Bank, Santander UK and TSB also intend to sell shares publicly between now and 2016.

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