Virgin Money, the bank that bought the rump of Northern Rock for £750m last year, has paved the way for flotation on the stock market with news that it moved into the black late last year and will make a profit this year.
Jayne-Anne Gadhia, chief executive, said yesterday that Virgin Money had proved itself as the new challenger bank in the UK, having added more than a million customers since it bought Rock in January 2012, taking the total past five million.
She added: "The recent report from the Prudential Regulation Authority shows that we may be the only significant retail bank brand in the UK which does not require extra capital. We are well positioned for continued strong growth."
Virgin Money is expected to hold a beauty parade of investment bankers shortly to handle a potential £1.5bn to £2bn initial public offering. Ms Gadhia said: "A flotation would give us access to other forms of financing but it is not dominating my thinking."
She also said Virgin was not looking at reversing into NBNK, the attempt to form a new UK bank set up by Lord Levene but now run by Wilbur Ross, the US billionaire who is also Virgin Money's second-largest shareholder with 45 per cent.
Ms Gadhia said Virgin Money is "totally out of the running" for the sales of branches that was forced on Lloyds Banking Group and Royal Bank of Scotland because of their bailouts. "We no longer have any interest in either Projects Verde or Rainbow," she said. "One of the great advantages for Virgin Money is that its simplicity and transparency makes it attractive to customers. We have no legacy issues, which really puts us in a strong position over the traditional banks."
Yesterday's annual report showed that Virgin Money's losses fell from £59.1m in 2011 to £8.4m last year. It was profitable in each of the final four months of 2012 and has continued to increase profits every month this year.
Royal Bank of Scotland said yesterday it was working to increase lending to small and medium-sized businesses by billions. It said it was contacting creditworthy customers, telling them how much it was ready to lend them. A trial on 20,000 SME customers had seen it offer them £1.7bn of extra credit, and it will contact a further 100,000 customers shortly.Reuse content