Virgin Money to flex its muscle with new partners

THE Virgin group is eyeing new markets, including mortgages, and is looking for more partners in Australia.

Virgin Money to flex its muscle with new partners

RICHARD Branson's Virgin Money is looking for more partners in Australia to move into new markets, including mortgages, personal loans, insurance and superannuation, according to Virgin Group co-chief executive David Baxby.

In an interview with Australian Business to be shown on Sky Business tonight, Mr Baxby said Virgin Group was in talks with a new Australian financial partner with a broader distribution network to increase its product range.

That would be in addition to its long-term deal with the Australian arm of Citibank, through which it offered credit cards and online banking accounts.

"There are some real opportunities in the general banking market in Australia with the level of caution that has been shown by some of the competitors," said Mr Baxby, an Australian based in Virgin Group's headquarters in Geneva.

"We have got some really interesting discussions going on about ways to further enhance the brand and its penetration into some of the products that we haven't rolled out here at the moment.

"It would mean expanding beyond credit cards into mortgages, personal loans, insurance and superannuation."

Mr Baxby said Virgin Money's alliance with Citibank would "continue to be an incredibly important part of the business".

"But we think there are some other partners out there who can give us a greater marketing and distribution footprint that should continue to really expand our business. We think there is a bigger opportunity out there."

Virgin Money has been operating in Australia in various alliances since 2003, including a five-year deal with Westpac that at its peak had 750,000 Australian credit cards on issue.

The Westpac deal ended in 2008 and Virgin Money's plans to extend into Australia's mortgage and loan markets -- at one point through a deal with Macquarie Bank -- were scuppered by the global financial crisis.

Virgin Money was relaunched in Australia in 2010 through a 10-year deal with Citibank, initially focused on credit cards.

The group's plans to extend its Australian business follow the takeover in Britain of the "good assets" of the failed British bank Northern Rock in a deal with the British government.

The former building society was nationalised by the British government at the height of the financial crisis.

Sir Richard has said he planned to rename the branch network Virgin Money, an arm he planned to float on the London Stock Exchange in 2014.

The Australian arm of Virgin Money was run until recently by Mr Baxby's brother, Matt Baxby, who moved to the Bank of Queensland in May to head its retail banking business, lured by its new chief executive, Stuart Grimshaw.

David Baxby was last night honoured by his alma mater, Bond University, receiving the Robert Stable Alumni Medal, which recognises exceptional achievement by a graduate.

Mr Baxby was one of the initial students of the private-sector university, beginning his law and commerce studies in its third year of operation in 1992.

On graduation he worked for the Australian operation of Goldman Sachs before moving to its London office, where he was on the client team advising Virgin Group and got to know Sir Richard.

Mr Baxby returned to Australia for the launch of the Virgin Group and was involved in the early days of its airline operations here before moving to Shanghai for two years.

He then moved to Geneva, overseeing Virgin Group's international airline operations, before being appointed co-chief-executive of the entire group last year at the age of 37.

Mr Baxby said Virgin was pleased with the progress of Virgin Airlines in Australia, which was led by former senior Qantas executive John Borghetti.

"We are feeling particularly good about the way it is going," he said.

"John and his team have overseen a successful rebranding and it is performing very strongly here in the business market.

"We are incredibly confident about the progress he is making."

But, he said, the international aviation market remained difficult because of high world oil prices.

Mr Baxby said Virgin Group was also considering expanding into hotels in Australia.

He said there were strong synergies between airlines and the hotel business.

"John and his team carry 15 million passengers a year on their aircraft, and quite a few of them want a hotel room."

Last month the Virgin Group began considering teaming up with private equity group Archer Capital to buy Mantra's $400 million Australian accommodation business. "There are natural synergies . . . we could bring at least the marketing of those two businesses (airlines and hotels) together if we are able to succeed in acquiring (a hotel business)," Mr Baxby said.