Bank of Queensland buys stake in Virgin Money
(11 April 2013 – Australia) Bank of Queensland (BoQ) is buying Richard Branson’s Australian Virgin Money business for A$40 million – just three years after vowing to take on the big banks through its personal finance arm.
On Wednesday, BoQ released a statement that it would be snapping up exclusive rights to Virgin’s brand in Australia, which has over 150,000 credit card, insurance and superannuation customers.
BOQ will pay A$30 million of the deal price in its own stock and about A$10 million in cash. It will receive exclusive use of Virgin's brand in Australia for up to 40 years.
The lender will also pay Branson's company a royalty, and Virgin Group will get a seat on the board of BoQ.
The deal is the latest chapter in Virgin Money's long-running attempt to grab a bigger slice of the financial services market in Australia, after previous tie-ups with Westpac and Macquarie Bank failed to deliver.
BoQ's managing director, Stuart Grimshaw said the deal would give the bank a greater chance to sell financial products to a wider range of customers.
"It will enable us to sell BOQ-manufactured banking products marketed under the Virgin Money Australia brand to customers who would be unlikely to walk into one of our branches, and provides a low risk, high potential entry point into online funds management distribution with an established brand,' Grimshaw said in a statement.
Branson said Australia remained 'one of Virgin's most important markets.'
"I am excited that, in partnership with BoQ, we will be able to develop more leading products and distribute them even more widely, so many new customers will get to experience the benefits of Virgin Money,' he said in a statement.
Brian Bissaker, the previous head of Colonial First State, will become Chief Executive of Virgin Money Australia.
BoQ said Virgin Money Australia was a loss-making business because it was still in a start-up phase.
It comes after Mr Branson relaunched Virgin Money in Australia with financial backing from Citi in 2010, vowing to take on the big banks.
Citi will continue to provide the 'white label' credit cards under the deal with BOQ – the US bank also provides BoQ's credit cards.
BOQ will pay A$30 million of the deal price in its own stock and about A$10 million in cash. It will receive exclusive use of Virgin's brand in Australia for up to 40 years.
The lender will also pay Branson's company a royalty, and Virgin Group will get a seat on the board of BoQ.
The deal is the latest chapter in Virgin Money's long-running attempt to grab a bigger slice of the financial services market in Australia, after previous tie-ups with Westpac and Macquarie Bank failed to deliver.
BoQ's managing director, Stuart Grimshaw said the deal would give the bank a greater chance to sell financial products to a wider range of customers.
"It will enable us to sell BOQ-manufactured banking products marketed under the Virgin Money Australia brand to customers who would be unlikely to walk into one of our branches, and provides a low risk, high potential entry point into online funds management distribution with an established brand,' Grimshaw said in a statement.
Branson said Australia remained 'one of Virgin's most important markets.'
"I am excited that, in partnership with BoQ, we will be able to develop more leading products and distribute them even more widely, so many new customers will get to experience the benefits of Virgin Money,' he said in a statement.
Brian Bissaker, the previous head of Colonial First State, will become Chief Executive of Virgin Money Australia.
BoQ said Virgin Money Australia was a loss-making business because it was still in a start-up phase.
It comes after Mr Branson relaunched Virgin Money in Australia with financial backing from Citi in 2010, vowing to take on the big banks.
Citi will continue to provide the 'white label' credit cards under the deal with BOQ – the US bank also provides BoQ's credit cards.
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