Virgin passes £20bn mark on mortgages
The bank, headquartered in Edinburgh, entered the mortgage market when it bought the lending business of Northern Rock in January 2012 and now claims to have been Britain’s third biggest lender last year.
The group said Bank of England figures, released as part of its oversight of the Funding for Lending programme, show it was “one of the fastest growing mortgage lenders” in 2013 and “the third largest net mortgage lender in the UK”.
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Hide AdThe former Northern Rock mortgage book stood at £14bn, and Virgin Money said that figure has risen by 43 per cent since, with more than 72,000 households choosing its products. Of those, 6,500 were first-time buyers and a further 16,500 were “next-time buyers”, making their second move up the property ladder.
Virgin Money is seen as one of the most successful of the “challenger banks”, which are seeking to carve out a niche in a market traditionally dominated by a few big players.
It is gearing up to launch a current account before the end of June, after delivering its first underlying profit since it paid the UK government almost £1bn for Northern Rock in a deal that also gave it 75 branches, about one million customers and 2,100 employees.
News of its mortgage growth comes amid renewed speculation that Virgin Money is planning to float next year. It has previously said a float is “on the agenda”, but has not set a timetable for an initial public offering. Under the terms of the Northern Rock takeover, the Treasury is in line for an extra payment of up to £50 million following a “successful, profitable” float or sale between 2012 and 2016.
The amount payable reduces over time, falling to zero by 2017, but Virgin Money’s last annual report shows it has now set aside £14m – up from £5m in 2012 – “reflecting the board’s view of the increased possibility of an IPO before 2017”.
The bank is estimated to be worth between £1.5bn and £2bn.