Virgin Money Plans SME Banking Entrance

Virgin Money, a U.K. challenger bank, will begin to look towards small businesses to gain new customers.

Reports in the Financial Times Wednesday (Mar. 1) said efforts among U.K. regulators to inject competition in the nation’s banking sector have prompted Virgin Money to explore entrance in the SME banking space with help from Royal Bank of Scotland (RBS). Virgin Money chief executive Jayne-Anne Gadhia told the publication that the “new-look Williams & Glyn” could help the lender enter the space.

The Treasury had previously submitted a proposal to Brussels that would finance challenger banks and encourage small businesses to switch financial service providers. That proposal would be an alternative to existing plans that would see RBS establishing 300 bank branches under its Williams & Glyn brand, a condition of the bank’s £45.5 billion (about $56 billion) bailout received by the European Commission amid the global financial crisis.

A step into the small business banking arena would follow positive performance from Virgin Money, which just reported a 40 percent profit boost for its U.K. credit card and mortgage operations. Reports noted that the bank had previously signaled that it was considering plans to enter into the space, although Virgin Money backed off from those plans following the Brexit vote.

Gadhia also reportedly said Virgin Money is considering acquiring part of the Co-Operative Bank, which recently announced it is up for sale.

“We’ve always said we’ll look at all opportunities,” the executive told the Times. “We don’t need to do an acquisition for this business to grow and thrive. That means we can always look at acquisition opportunities sensibly.”