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UPDATE 1-UK's Virgin Money to look at Co-op Bank assets
February 28, 2017 / 10:40 AM / 9 months ago

UPDATE 1-UK's Virgin Money to look at Co-op Bank assets

(Adds details, quotes from CEO)

By Rahul B and Esha Vaish

Feb 28 (Reuters) - British bank Virgin Money would look at buying assets from up-for-sale Co-operative Bank , its head said on Tuesday, after the group reported operating profit rose by a third last year.

Rescued from the brink of collapse by a group of hedge funds in 2013, Britain’s Co-op bank is seeking a buyer after struggling to meet regulatory capital requirements. Its purchase would add four million customers to any bank’s books.

“The bank has not approached anybody in Co-Op Bank yet,... but at some point we will look at this strategic opportunity,” Virgin Money Chief Executive Jayne-Anne Gadhia told Reuters.

She did not specify whether Virgin Money would want to buy the whole business or seek to cherry pick certain assets.

Virgin Money on Tuesday highlighted resilient demand from borrowers following Britain’s vote to leave the European Union, and Gadhia said the bank had not tightened any lending criteria.

Its underlying pretax profit rose to 213.3 million pounds ($265.1 million) in 2016, up from 160.7 million pounds the previous year.

Gross mortgage lending rose 12 percent to 8.4 billion pounds in the year, giving the so-called challenger bank a 3.4 percent share of a UK mortgage market dominated by larger players.

Shares in the company rose 0.6 percent to 335.5 pence at 1025 GMT.

However, the lender’s impairment charges increased to 37.6 million pounds from 30.3 million, with most of the rise coming in its credit card business, which the firm attributed to a jump in its credit card lending by 55 percent to 2.4 billion pounds.

The bank, which listed on London’s main market in 2014, said, it was sufficiently nimble to adjust to changes in the operating environment as timing and nature of Britain’s exit from the EU remains unclear.

The lender said it added more than 35,000 customers per month to its books, mainly through its digital channels. Over 82 percent of its sales were through digital channels.

However, Gadhia said that the bank was committed to maintaining its existing branch network. ($1 = 0.8047 pounds) (Additional reporting by Justin G Varghese and Noor Zainab Hussain in Bengaluru; editing by Jason Neely/Keith Weir)

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