Virgin Money Hires Chief For SME Banking Push

Virgin Money will announce on Thursday that it has hired a senior executive to spearhead a push into small business banking as it bids to extend its 'challenger' status beyond its retail customer base.

Sky News has learnt that the lender, which floated on the London Stock Exchange last year, will disclose alongside its quarterly results that George Ashworth is to join shortly.

The move will represent Virgin Money's first significant attempt to build an SME banking operation, and follows its integration of Northern Rock, which it acquired from British taxpayers four years ago.

Virgin Money is backed by Sir Richard Branson and the US billionaire Wilbur Ross, and has been buoyed by the strong performance of its shares since its listing debut.

Mr Ashworth spent four years at Aldermore, another of the industry's fast-growing companies, before joining the Dutch lender ABN Amro, where he headed its UK leasing operations.

His appointment will come just days before competition authorities publish their provisional findings about the retail current account and SME banking markets.

A number of significant recommendations are likely to be made in an effort to bolster competition, although many industry executives are sceptical about the likelihood that they will break the stranglehold of the main high street lenders.

A group of challenger banks recently met Treasury officials to protest about the Chancellor's plans for a corporation tax surcharge that will increase the tax burden of a number of smaller banks.

Virgin Money, which is not a member of the British Bankers' Association, was not among the lenders which attended that meeting.

Some of its peers, including OneSavings Bank and Secure Trust Bank, have been vocal in demanding a levelling of the playing field in relation to the amounts of capital they are forced to hold against certain types of lending relative to their largest competitors.

SME lending has been a particularly contentious issue since the banking crisis, with the Labour Government, and subsequently the Coalition formed in 2010, announcing a string of initiatives aimed at stimulating lending to smaller companies.

The 'Project Merlin' scheme of 2011 committed to making £190bn in credit available to businesses.

While that target was comfortably met, a separate £76bn goal for SME lending was missed by the big banks, intensifying the political pressure on them.

As the UK economy has recovered, however, bank executives say the scrutiny on their business lending figures has diminished, with Treasury schemes such as Funding for Lending generating mixed results.

The challenger banks have proposed a new iteration of that programme focused on SME lending, although the Treasury has yet to respond.

Virgin Money declined to comment on Mr Ashworth's appointment on Wednesday.