Virgin Money has announced it has reached an agreement to buy regional bank Church House Trust.
It is hoped the deal will provide a platform for Virgin Money to develop a retail banking business in the UK which will offer savings and mortgage products to consumers.
As part of the acquisition, Virgin will pay £12.3million for the Church House Trust and will invest a further £37.3million into the business.
Commenting, Sir Richard Branson, founder of the Virgin Group said: "The Church House Trust business offers us a strong platform for growth. Virgin Money aims to bring simplicity to the UK banking market which has traditionally been a complex sector."
Virgin Money currently offers a range of credit cards, ISAs and insurance products, but this deal will give the company the banking licence that is required to expand their offering.
Jayne Anne Gadhia, chief executive of Virgin Money said the deal will pave the way for a "different form of banking" and will increase competition in the sector.
"Our aim is to make ‘everyone better off’ in the way we do business by offering good value to customers, treating employees well, making a positive contribution to society and delivering a growing profit to shareholders," she said.
Welcoming the deal, Kevin Mountford, head of banking at moneysupermarket.com said: "Following a period of mass consolidation in the banking and building society sectors it is great to see a serious player making a move to challenge the big banks.
"We have already seen Virgin Money play an aggressive role in the credit card market with their best buy products, and we can expect them to likewise with across a broader set of banking products."
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