Virgin Money chief downplays impact of Branson bailout plea
The chief executive of Virgin Money UK has denied that plans to rebrand its Clydesdale and Yorkshire branches have been set back by the negative publicity over Sir Richard Branson’s plea for a government bailout of Virgin Atlantic.
The banking group said the Covid-19 outbreak had forced it to delay the project and at least 500 planned job cuts that were due to follow CYBG’s £1.7bn takeover of Virgin Money in 2018.
What are the UK government’s ‘five tests’ for ending lockdown restrictions?
The UK government has said that these five tests have to be met before they will consider easing coronavirus lockdown restrictions:
- The NHS has sufficient capacity to provide critical care and specialist treatment right across the UK
- A sustained and consistent fall in daily deaths from Coronavirus
- Reliable data to show that the rate of infection is decreasing to manageable levels across the board
- Operational challenges including testing and personal protective equipement (PPE) are in hand with supply able to meet future demand
- Confident that any adjustments to the current measures will not risk a second peak of infections that overwhelms the NHS
David Duffy, who could not confirm when the programme would resume, denied he was reconsidering the rebranding because of the row over whether Virgin Atlantic should be handed coronavirus funds in light of Branson’s personal wealth.
The CEO said on Wednesday: “Effectively we are continuing with the implementation of the our rebranding. We think it’s a great consumer brand and we are delivering for our customers in a really customer-oriented way, which is in the DNA of that brand.
“So absolutely no changes to make in terms of that, and all airlines are suffering from the same level of difficulty, so I’m not concerned.”
Virgin Money has been paying Branson, a billionaire, about £11m-£12m a year in licence fees to use the Virgin name since the takeover. However, the bank’s chief financial officer, Ian Smith, said there were “various provisions on both sides for amending that as necessary”.
Virgin Money reported a 97% fall in statutory pre-tax profit in the first half of the year, pushing it to a £7m loss compared with a £274m profit a year earlier. The slump was driven by loan loss provisions worth more than £230m, most of which was linked to Covid-19.
Branson has been in the spotlight in recent weeks after calling for government funds to prop up Virgin Atlantic. He is the majority owner of the airline, which he founded in 1984.
His plea prompted a backlash owing to his personal fortune and because he has paid the exchequer no personal income tax since moving to the tax-free British Virgin Islands 14 years ago.
The airline, which has so far failed to secure government support, announced on Tuesday it was planning to cut 3,150 jobs and shut its operations at Gatwick airport in response to a collapse in demand during the pandemic.
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