Kevin O’Donnell: Sir Richard is in virgin territory
With the purchase of nationalised bank Northern Rock, Virgin Money has thrown down the gauntlet not just to high street banks but to IFAs nationally.
Many years ago I was fortunate enough to be invited to a PR bash at Sir Richard Branson’s London home.
It was not long after Virgin Money had been set up and he was keen to promote Virgin’s Cat-standard Isa (remember the Cat-standard?). It was a pleasant summer’s evening with drinks and a buffet. I did my best not to be swayed by the live big cat, a leopard, being walked around his garden by a handler nor the scantily-clad assistants dressed up as cats and waiting to welcome us.
Your correspondent tracked him down and in my brief chat with him, I was taken by the fact that he was smaller than I thought, his beard was immaculately trimmed and he was more serious and thoughtful than I had expected. Not the brash showman at all.
If Virgin is going to unleash the opportunity in its branches it will have to offer much more, including financial advice
He did, however, come across as a very astute entrepreneur with quite an interest in financial services and that is why Virgin Money’s purchase of Northern Rock has me intrigued. What does he know that I don’t?
It is too early to tell, of course, but could he have spotted an opportunity in high street banking that most have missed? Could his purchase of a failed bank mark the start of a renaissance in high street banking or, perhaps more realistically, high street financial advice?
The old days of the high street bank as the centre for money transactions are now over and Sir Richard well knows that.
He has, however, long courted a presence in the UK high street that has been missing that since the closure of the Virgin record stores, rather smartly sold off just before we all bought iPods (see what I mean about astute?).
Admittedly, Northern Rock is perhaps not the best name but it does come at a knockdown price having been supported in intensive care for several years now by you and I, the long-suffering UK taxpayers who have lost hundreds of millions in keeping it going.
I have had misgivings about Northern Rock and its strategy for many years. It should have lived up to its name and been a rock among financial institutions. Instead it was more a wobbly boulder than a sold rock for many years.
Rather than sticking to its knitting, it fought tooth and nail for market share, offering cut-rate mortgages often sold with a sting in the tail in terms of entrance and exit charges.
It was pilloried more than once by the national press for the unsavoury tactic of offering tempting savings rates to “rate tarts” only to take the hatchet to savings rates after the money was handed over.
Its 75 branches are no match for the bigger high street institutions but the purchase of Northern Rock does give the owner of Virgin Galactic, Virgin Atlantic, Virgin Wines and dozens of other Virgin offspring the foundation to build a much bigger retail finance empire if he wishes and I suspect he does wish.
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