VIRGIN Money’s planned assault on high street banking has been given a major boost with the backing of tycoon Wilbur Ross, it is claimed.
The American billionaire, who made his fortune investing in struggling steel and oil companies, is expected to help bankroll Virgin Money’s £2bn bid for the 318 branches being sold by Royal Bank of Scotland.
As part of his involvement, the tycoon will pay £100m for a 21% stake in Sir Richard Branson’s finance operation, according to newspaper reports.
If Virgin fails to win the RBS network, the investment will support the bank’s own plans to build a network of 70 branches by 2015, including a £10bn loan book.
Virgin Money declined to comment.
The bank, which failed in its efforts to buy now-nationalised Northern Rock two years ago, currently offers savings, credit card and investment products to about 2.5m customers.
But the recent acquisition of Somerset-based Church House gave it the platform to move into deposits and mortgages and boost the scale of the business through further deals.
The RBS assets, under the Williams & Glyn’s name, were put up for sale after the European Commission ordered that the bank divest assets in order to meet state aid rules.
An estimated 1.7m retail customers will be transferred with the sale, along with 5% of the UK’s small business banking market.
Virgin Money is expected to face competition from Abbey and Alliance & Leicester owner Santander, as well as National Australia Bank, which owns the Clydesdale and Yorkshire banks. Another Spanish bank, BBVA, and private equity firm JC Flowers are also thought to be interested.
As well as the RBS estate, high street networks belonging to Lloyds Banking Group and Northern Rock are also likely to be sold later this year.
Mr Ross, who is expected to take a seat on the Virgin Money board, was one of the backers lined up to support Virgin’s bid for Northern Rock in 2007.
It is thought the backing of Mr Ross could help Virgin attract sizeable investments from other North American investors, as well as from sovereign wealth funds in the Middle East and Asia.