Branson targets AMP's Virgin Money

SIR Richard Branson is poised to buy out the 50% stake held in Virgin Money, the web-based personal finance business, by Australian financial services group AMP.

Branson's Virgin group would take over management of the brand and look to outsource the financial infrastructure to another provider - possibly Royal Bank of Scotland, which bought the Virgin One retail bank account for £100m three years ago.

Virgin Money s

ells mass-market products such as credit cards, insurance, pensions and mortgages over the internet.

'AMP have said they want to sell all of their interests in the UK,' Branson said. 'We would like to acquire their 50% of Virgin Money and we are in discussions at the moment about that. We're pretty close to reaching agreement.' The price would be around £40m.

The sale, which could be finalised within days, is part of AMP's strategy to realise some value from a decade-long expansion that has produced low returns, particularly in Britain.

A sale would be a blessing for AMP's 990,000 shareholders, who meet tomorrow to vote on a A$10bn (£4.26bn) plan to split the Australian and UK operations. The British business includes NPI and Pearl.

AMP's half-share in the Virgin Money business is carried on its books at A$84m, but Branson could be prepared to pay slightly more to buy out AMP.

'I can't really say publicly at this stage what the stake is worth,' Branson said. 'But we'd pay a fair price.'

There has been speculation that Virgin would seek to buy out AMP since the Aussie group unveiled its shake-up plans last year.

AMP got into the venture by buying out Norwich Union, the insurance group now part of Aviva. in November 1995. It provided the expertise in pension products to be offered to British investors and to tackle the markets of British insurers. AMP reportedly contributed at least £50m to get Virgin Money running.

But there has been little evidence that the joint venture has made any money for AMP or Branson. Last year AMP wrote down the value of its share by A$100m as part of A$1.23bn in total write-downs across its subsidiaries.

However, Virgin Money previously has said it was set to break into profit this year and was on target to issue 200,000 credit cards.

AMP's British brands also include London Life, Henderson Investors and advisers Towry Law. The businesses have total assets of £32bn and three years ago were making profits of £250m.

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