MORE than 150 new jobs will be created on Tyneside as Sir Richard Branson’s Virgin Money launches its own credit card business.
A £1bn deal with American bank MBNA will see the credit card operation run from the former Northern Rock headquarters in Gosforth. It will create at least 150 jobs when it opens for business at the start of next year.
The group, which has partnered with MBNA since 2002 to provide Virgin credit cards, has agreed to buy £1bn of the firm’s UK credit card assets. MBNA is part of Bank of America.
Around 1.6m customers already have a Virgin credit card through MBNA and 550,000 of these will transfer to the wholly-owned Virgin Money business in early 2014.
Jayne-Anne Gadhia, chief executive at Virgin Money, said: “Launching Virgin Money Cards is an excellent strategic opportunity for Virgin Money, in a market we know well.
“A credit card business will complement our existing mortgages and savings business and represents another significant step in growing our bank.”
She said that the move will “bring some fresh new competition to the UK market“ and that it was expected to grow strongly.
The deal comes after Virgin bought nationalised Northern Rock and its 75 branches in a £747m deal as part of its aim to create a new challenger in the high-street banking sector.
The bank currently employs around 2,500 staff, 2,000 of whom are in Newcastle and this is the first expansion of staff since it was formed with the takeover of the good part of Northern Rock on New Year’s Day last year.
The UK’s seventh biggest bank also snapped up a £465m mortgage portfolio from UK Asset Resolution, the taxpayer- owned holding company for Northern Rock’s “bad” bank and Bradford & Bingley.
It is expected to launch its first current account later on this year as part of its move to become a full-service retail bank. It is also likely to start offering business loans in the longer term.
The new jobs will be at all levels and the operation will include a contact centre as well as management operations.
Lance Weaver, former vice chairman of MBNA, is joining the group as president of Virgin Money Cards and will be based in the UK. David Buxton, who has led Virgin’s partnership with MBNA for the past four years, will continue as managing director of the new credit cards business.
The news won a warm welcome after years of news of cutbacks.
James Ramsbotham, chief executive of the North East Chamber of Commerce, said: “It is fantastic news that Virgin Money is to create 150 new jobs at Gosforth. This is a clear demonstration of the company’s commitment to the North East.
“Having endured some challenging times in recent years, credit must also go to Virgin Money’s hard-working regional workforce who are now seeing the fruits of their labours with new work, new investment and new jobs.”
Newcastle North MP Catherine McKinnell said: “ “New private sector jobs are vital when so many redundancies are threatened across the public sector – I’m delighted by this announcement.”
The move will be seen as Virgin’s first real drive to revive the former Northern Rock after saving the collapsed bank in 2010 by buying it for £747m.
Northern Rock had 6,500 staff before it collapsed in 2007. It cut nearly 1,300 jobs in 2008 and then a further 650.