LONDON (Reuters) - Virgin Money, the British challenger bank partly owned by entrepreneur Richard Branson, named experienced industry figure Glen Moreno as chairman as it reported strong profit growth, putting it in good shape for an impending stock market listing.
Moreno, previously senior independent director at Lloyds Banking Group (LLOY.L) and acting chairman of UK Financial Investments, which manages the British government’s stakes in bailed-out banks, will replace David Clementi as chairman in mid-2015, the bank said.
Also serving as chairman of publisher Pearson (PSON.L), Moreno will become an independent non-executive director and chairman designate from January 2015.
Virgin Money, which bought nationalised lender Northern Rock in 2011, reported underlying first-half pretax profit of 59.7 million pounds ($96.9 million), up from 13.1 million the year before, when it made its first profit since the Northern Rock deal. Total income rose 28.3 percent to 210 million.
“The bank’s strategy has delivered sustainable, responsible growth and a strong return to profitability. It is now one of the best performing challenger banks,” Moreno said.
Industry sources expect Virgin Money, also backed by U.S. private equity tycoon Wilbur Ross, to list on the London Stock Exchange (LSE.L) as early as next month.
The bank has not commented on the timing of any flotation, however it is one of a number of new British banks eyeing up stock market listings and looking to break the dominance of the country’s “Big Four” lenders - Lloyds, Royal Bank of Scotland (RBS.L), HSBC (HSBA.L) and Barclays (BARC.L).
Other banks preparing for initial public offerings include Santander UK (part of Spain’s Santander (SAN.MC)), Aldermore, Shawbrook and Metro Bank, while Lloyds is set to sell off more shares in TSB TSB.L, which listed earlier in the year.
The new banks are looking to pick up business from established rivals who are slimming down in order to bolster their capital positions and meet tougher rules from regulators.
Virgin said it had taken a 26 million pound charge in respect of a payment due to Britain’s finance ministry should it successfully float the business between 2012 and 2016.
The arrangement was part of the terms of its acquisition of Northern Rock. The amount payable to the Treasury varied on a sliding scale between a maximum 50 million pounds at the start of 2012 to nothing from 2017 onwards.
Virgin Money, which was Britain’s third-biggest net mortgage lender last year behind Barclays and Nationwide, said there had been a 3.7 percent increase in its gross mortgage lending to more than 20 billion pounds.
The bank also said it was on track to launch a credit card business in the second half of 2014 and hoped to grow the credit card book to 3 billion pounds within five years.
The bank said its performance benefited from growth in its net interest margin (NIM) - the difference between the interest a bank lends at and what it pays to savers - to 1.43 percent from 1.1 percent the year before.
Virgin Money said its core Tier 1 ratio, a key measure of its financial strength, was 14.4 percent. The Prudential Regulation Authority has set a minimum requirement of 7 percent but is expected to demand 11 percent in future.
Editing by Simon Jessop and David Holmes