Virgin Money eyes deal for 600-plus Lloyds branches

Virgin Money has put itself in the running to make a bid for more than 600 high street branches in what would be a 'transformational' step for the fledgling bank.

The group, founded in Norwich, said yesterday it is looking at the purchase of 600 high street branches being sold off by Lloyds Banking Group on order from the European Commission after its 2008 take-over of HBOS.

It is also looking at 76 branches belonging to the nationalised Northern Rock.

If it bought the Lloyds branches alone, Virgin Money would become the seventh largest UK bank.

Yesterday it was also revealed that Virgin Money had taken on Mark Selby as chief operating officer and Chris Daniel as group property director, both former Santander executives.

The move is seen as preparation for integrating branches, as Mr Selby managed the Abbey, Alliance and Leicester and Bradford and Bingley brands being folded into Santander.

However, Virgin Money, which announced a move into new headquarters in Edinburgh last month, will face stiff competition in both takeover bids.

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Coventry Building Society is expected to make an offer for Northern Rock, and the National Australia Bank could move to acquire branches disposed of by Lloyds.

Virgin Money was recently sidelined as a bidder for the Norwich and Peterborough building society after Yorkshire Building Society was picked as a preferred merger partner.

A Virgin Money spokesman said the firm intended to grow 'significantly'. 'An acquisition is clearly a quicker way of doing that than building from the bottom up,' he said. 'As a new entrant starting from the ground up we're on the hunt for those assets.'

He added that the acquisitions would be a 'transformational' step for the company.

Jayne-Anne Gadhia, chief executive of the Norwich-founded group, said in January that she hoped it would become a 'significant banking player' within 18 months.

Last year Virgin bought the Church House Trust to gain a banking licence. It hoped to capitalise on its existing 3m customers and branch into current and savings accounts.

Even without the takeovers the firm aims to create 70 new branches of its own within the next five years. The first four, to be styled Virgin Lounges with coffee machines and free WiFi, are due to open in September in Norwich, Manchester, Edinburgh and London.

The bank will also release a savings account this summer under the Church House Trust brand, with a Virgin Money savings account following in the autumn.

The company employs 250 people in Norwich and posted a 46pc increase in operating profit to �38.4m in 2009 on �109.5m turnover.