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Virgin Money to buy Church House Trust

Subject to approval by shareholders in the unquoted Church House Trust plc at the end of January, the company is to bought by Virgin Money Holdings (UK) Ltd for £12M.

Church House cites as reason for the takeover:

'... unsettling market conditions have impacted the growth prospects of Church House Trust as an independent entity and emphasised Church House Trust’s exposure to economic and financial volatility. CHI traded at a loss during 2008 and 2009 principally due to the fall in management fees caused by a decline in UK share prices.'

Virgin Money say:

'Research conducted by Virgin Money over the past two years has shown consistently that there is a clear consumer demand for Virgin Money to enter the banking market. The research demonstrates that Virgin Money would be both a trusted deposit taker and mortgage lender. The acquisition of Church House Trust will provide the platform from which Virgin Money will develop a retail banking business in the UK, offering a full range of products to consumers under the “Virgin Money” brand.

Following extensive research and an evaluation of a number of opportunities to enter the retail banking market, Virgin Money identified Church House Trust, a regional private bank, as an attractive vehicle for launching a retail banking business in the UK and Virgin Money believes that Church House Trust offers it a strong platform for growth. The reasons for this are:

  • Church House Trust’s scale will facilitate a seamless integration into the existing operations of Virgin Money

  • Church House Trust has all the necessary banking permissions and a good relationship with the FSA

  • Church House Trust has no reliance on wholesale markets for funding, no borrowing from other banks, retail deposits of more than double its loan book, a broad range of savings products and it focuses on detailed personal underwriting

  • Church House Trust offers an IT infrastructure that can be strengthened and built upon;

  • Virgin Money has undertaken significant due diligence, and it believes relevant issues can be addressed satisfactorily by its business and integration plans

  • Virgin Money can use Church House Trust as a platform to allow savings and mortgage products to be offered to consumers under the Virgin Money brand

  • having established an initial banking platform, the Virgin Money Directors believe that the acquisition of Church House Trust will enable Virgin Money to contemplate future acquisitions as appropriate. The Government has said it hopes the disposal of bank assets will see new players enter the market and Virgin Money may consider opportunities should they present themselves.

Following the acquisition of Church House Trust, Virgin Money will be well capitalised with an initial Tier 1 ratio in excess of 35 per cent. and will inject £37.3 million of new capital into Church House Trust. Liquidity management will also reflect best practice and the business will focus on the controlled growth of retail deposits.

Virgin Money aims to bring simplicity to the UK banking market which has traditionally been a complex sector. Virgin Money will provide a better, different form of banking to its customers, increasing competition in the sector. Virgin Money’s aim is to make ‘everyone better off’ in the way it does business by offering good value to customers, treating employees well, making a positive contribution to society and delivering a growing profit to shareholders. Virgin Money’s approach to banking is founded on developing a sustainable, savings-based business. Virgin Money sees the acquisition of Church House Trust as a strong and sensible first step in delivering Virgin Money’s banking ambition.


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