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Virgin Money IPO marks challenger bank emergence

Virgin Money, one of the upstart smaller U.K. banks, is expected to announce plans to raise around £2 billion ($3.2 billion) in an initial public offering (IPO) this week.

The IPO will result in paydays for Sir Richard Branson's Virgin Group, U.S. billionaire Wilbur Ross and the U.K. taxpayer.


Virgin Group owns around 47 percent of Virgin Money, Ross 45 percent and the U.K. taxpayer gets £50 million under the terms of Virgin Money's purchase of the "good bank" assets of nationalized lender Northern Rock.

Neither Virgin Group nor Ross is expected to sell off their full stakes in the deal.


Virgin Money is one of several post-credit crisis challenger banks which have emerged in the U.K. in recent years, to contest the larger banks' dominance of retail banking, and one of several to try their luck on the stock market this year.

Other challengers IPOing this year include Aldermore and OneSavings Bank. Metro Bank, one of the most visible of the upstart banks, decided to postpone its IPO plans until 2016 earlier this year.

- By CNBC's Catherine Boyle