Virgin Money interested in RBS and Lloyds branches

LONDON Mon Feb 1, 2010 4:08pm EST

LONDON Feb 1 (Reuters) - Virgin Money's new chairman Brian Pitman said on Monday he is interested in buying Lloyds (LLOY.L) and RBS (RBS.L) branches if the locations are right.

The veteran banker, who was appointed last week, also said he believes the government would not sell Northern Rock until later this year, to give it time to become "sound."

Pitman, the former chairman and CEO of Lloyds TSB, who built it into one of the biggest in the world, said he wanted to create a "solid bank" at Virgin Money, establishing a network of branches.

When asked if he would be interested in buying the branches put up for sale by Lloyds and RBS, he told Sky News, "We could well be looking at those, because if they've got branches that are in locations that we were interested in, then it would speed up the process of actually establishing branches."

"There's lots of premises available at the moment, there's no shortage of premises to buy and build up branches from that, and at very good prices," he added. "Low prices, that would be an advantage, but of course it wouldn't be as quick as buying branches of existing banks."

Pitman was an adviser to Virgin Money in its failed attempt to buy Northern Rock two years ago.

"Everything would depend on the price," he said when asked if he would be tempted to buy it now. "If the price is right then we shall be interested."

It was unlikely that there would be any sale until the second half of the year because the government will "want to demonstrate that the new good bank, as it were, of Northern Rock is in a sound position, and that will take a little time."

He said the bank aims to get into the current account business because it opens doors to other activities.

"We shall certainly get into the mortgage business and we shall get into the fixed deposits," he said.

He branded Internet-only banks as a failure.

"You have to have some service centres to meet the customer, and that is what we shall have to get," he said.

Virgin Money, the banking arm of Virgin Group, last week completed a 50 million pound deal to buy small bank Church House, giving it a banking license to act as Richard Branson's springboard into mainstream banking.

He said the bank would not put a cap on bonuses, and they would be "pretty modest" compared with those of investment banks.

Pitman, a senior adviser at Morgan Stanley (MS.N), who was appointed by Britain's financial regulator in November as one of five advisers to help on a framework for ensuring effective governance in banks, said there was no doubt that there will be much higher capital ratios in future. (Reporting by Avril Ormsby; Editing by Robert MacMillan)