Virgin Money is in talks to buy a small UK bank to accelerate plans to become a main player in the banking sector, according to a report today.
Discussions are said to be at an advanced stage to snap up a small deposit taker as a way to get a banking licence and offer a full range of financial products, according to The Financial Times.
Virgin already applied to the Financial Services Authority for a licence in October, but the process can take up to six months.
A deal to buy a small UK bank would help speed up Virgin’s aims to become a fully fledged bank, allowing it to takeover a group that already has a banking licence rather than gain a new licence itself.
It is understood that any takeover of an existing licence holder could also act as a springboard for future, larger acquisitions.
Virgin Money is widely seen as a front runner to bid for the “good” part of nationalised bank Northern Rock, having launched a failed bid for the stricken lender before it fell into public hands.
Northern Rock is expected to be put on the sale block soon after the split into a good bank and bad bank is completed early next month.
Virgin Money remained tight-lipped on today’s reported acquisition talks, but confirmed it was looking at a number of options to become a bank.
Scott Mowbray, head of media and external affairs for Virgin Money, said: “We still have options on the table that we are working through.”
Its reported takeover target is believed to be a relatively unknown operator with a small customer base.
Virgin is also touted as a potential bidder for the assets being sold by part-nationalised Lloyds Banking Group and Royal Bank of Scotland.
Headed by chief executive Jayne Anne Gadhia, Virgin Money has been looking to launch as a full bank for some years.
The Government is also keen for new entrants to the sector following the dramatic consolidation seen in the wake of the financial crisis, and Virgin Money is expected to be one of a number of groups breaking into the UK banking sector next year.