Richard Branson Wants a Bank

The Wall Street Journal is reporting that Virgin Money, a subsidiary of Richard Branson’s Virgin Group, is looking to become a bank.  The article is entitled, “Virgin Seeks Bank Role,” (10/26/09, Section C5).  Nicknamed “The Rebel Billionaire” by some, Richard Branson is known for taking chances.  According to the article, Virgin had tried to acquire a troubled British bank called Northern Rock in 2007, but was unsuccessful.  The British government eventually nationalized Northern Rock.  The article cites a spokesman for Virgin who has stated, “since Northern Rock, we’ve stated our ambition to become a bank.”  It is unclear whether Virgin will continue to pursue Northern Rock once the British government puts it on the market.  However, this appears to me to be the most likely scenario. 

            So why exactly would Virgin want to go into the banking industry?  I think there are several reasons.  Virgin, it must be remembered, is a company known for taking chances.  It started off as a record company, and then made a successful venture into the airline industry.  Virgin has since gone into the mobile business as well.  In fact, Virgin consists of over 400 companies.  The leadership has clearly demonstrated a desire for vast diversification.  I personally believe that Virgin, with its keen eye, sees great opportunities in the banking sector.  There are a variety of reasons for this.  If you are in the market to buy a bank, you can’t do much better than the times at hand.  Government takeovers yield terrific buying opportunities.  In the case of Northern Rock, the British government is spinning off the good parts of the company, and keeping the bad parts.  If Virgin were to buy this scrubbed-clean version of Northern Rock, and then slap its very well liked brand name on it, they could have an instant hit on their hands.  It is also a good time to become a bank owner because so many banks are struggling these days.  Starting fresh automatically gives you a leg up on almost everyone, as many banks are still coming to grips with troubled assets.  Lastly, Virgin would basically be starting off in the banking sector as a brand new entity—not as one those banks that almost caused the world economy to collapse.  I feel this would hold great appeal for customers who are upset with their current institutions.           

While many things are uncertain, it does appear to me that Virgin will likely be a bank owner someday.  I, for one, am interested to see how this will play out.  My only personal experience with Virgin was when I flew to London a couple of years ago on their airline.  I have to say, it was a most pleasurable flight.  They were obviously intent on providing excellent service, and keeping their customers as happy as possible on that long trip across the ocean.  If Virgin were to bring these same principles into the banking industry, I believe they would be wildly successful.