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Wilbur Ross backs Virgin bid to buy RBS branches

Wilbur Ross backs Virgin bid to buy RBS branches

U.S. billionaire investor Wilbur Ross has bought a 21 percent stake in Richard Branson's Virgin Money, backing the British entrepreneur's bid to buy hundreds of branches of the government-owned Royal Bank of Scotland.
Ross, who made his fortune investing in struggling steel and oil companies, paid 100 million pounds ($152 million) under the deal announced Tuesday.
He added that he may invest more funds _ up to 10 times his initial investment via his WL Ross investment vehicle _ as Virgin seeks to expand its retail banking services.
The group picked up a banking license with its acquisition of regional lender Church House in January, giving it a foothold in mortgages and deposit accounts.
But it is likely to face tough competition for the 318 RBS branches, with Spain's Banco Santander and National Australia Bank expected to be among those making bids before the deadline for indicative offers later Tuesday.
RBS was ordered to sell the branches, representing around 14 percent of its retail network, by the European Commission last year to ensure competition after the government bailout. The branches have about 1.8 million retail customers, or 2 percent of the market.
If Virgin fails to win the RBS auction, it plans to go it alone, opening 70 branches by 2015. There are also likely to be other banking assets up for sale later in the year from other bailout recipients Lloyds Banking Group and Northern Rock.
Ross said he was "impressed with Virgin Money's well-deserved reputation with U.K. customers and with its growth strategy."
"We look forward to supplying substantial additional capital to support Virgin's acquisition program," he said.
It is not the first time that Ross has backed Branson's banking ambitions. He also teamed up with Virgin for the company's unsuccessful bid to buy mortgage lender Northern Rock, shortly after it became Britain's first credit crunch casualty in 2007.
The government's decision against a fire sale, leaving Northern Rock taxpayer-owned, bitterly disappointed Branson.
The British businessman said he was "delighted that WL Ross has decided to invest and partner in our vision for a new way of banking."
WL Ross vice chairman James Lockhart will join the Virgin Money board as part of the deal.


Updated : 2021-07-25 12:25 GMT+08:00