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Virgin Money announces acquisition of Church House Trust

Despite intense speculation that Virgin Money had already agreed a deal with the UK government for the acquisition of Northern Rock, the company has today surprised the markets with the purchase of Church House Trust, a small regional bank, for an initial outlay of £12.3 million. While this is obviously tiny compared to the likes of Northern Rock and other UK banking institutions, it does secure a UK banking licence for Virgin Money and a base from which to grow.

Church House Trust is based in Yeovil in Somerset, has no branches and reported operating income of just £4 million last year. However, the company is profitable after making £450,000 last year and its business model does not depend upon wholesale money markets thereby reducing the risk of a Northern Rock style collapse in the future. While many will mock the tiny acquisition of Church House Trust there is no doubt it does give Virgin Money a base from which to grow and access to a UK banking licence.

This would now appear to leave the way clear for National Australia Bank to acquire the so-called "good band" operation of Northern Rock. The UK banking sector is changing all the time and hopefully we will see the introduction of more competition.

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