Branson sells Virgin mortgage arm

Richard Branson reorganises Virgin's financial services

Richard Branson's Virgin Group has agreed to sell its 25% stake in mortgage brokerage Virgin One to Royal Bank of Scotland (RBS) for £45m.

RBS, which already owns half of Virgin One, is also buying the 25% stake owned by Australia's AMP, giving it complete control of the venture.

Virgin One, which specialises in mortgage finance, was established in 1998 and now has more than 70,000 customers and assets of £3.75bn.

Virgin and AMP denied that the deal represented a withdrawal from financial services, saying they planned to reorganise their remaining joint ventures under one brand name, Virgin Money.

The two firms jointly own Virginmoney, an online bank, and Virgin Direct, a pension company.

AMP said it was possible that Virgin Money could be floated in the future.

How to spend it

Virgin Group denied it was raising cash to support other parts of its empire.

Instead, it said, it would be using most of the sale proceeds to help fund Virgin Money, while some will be ploughed into its mobile phone business and into expanding its retail operations.

Royal Bank is keen to expand its presence in the popular all-in-one current account and mortgage market of which Virgin One was a pioneer in Britain.

Virgin One's mortgage bank accounts combine a current account with a home loan; customers pay in their salary each month, which offsets their outstanding mortgage balance.

Interest is charged daily on a sliding scale and customers are allowed to underpay or overpay loan repayments.

Branding

Under the sale agreement AMP retains rights to the Virgin brand in financial services but RBS may market Virgin One for the foreseeable future, Virgin said.

During his career, Mr Branson has been associated with diverse products, ranging from soft drinks and bridal wear to air travel and a failed bid to operate the UK National Lottery.