Newcastle bank Virgin Money has been awarded £35m to help it break into the business banking market.
The grant has come from the Capability and Innovation Fund, part of the remedies package set up to mitigate for state aid given to Royal Bank of Scotland during the banking crisis.
Virgin Money said it would use the money to improve services to business, including scaling up its regional franchises, having more time with relationship managers and improving its digital offering.
The group said Virgin Money Business would launch next year and was aim to be a “true disruptor in the SME banking market and offer UK customers a meaningful alternative to the incumbent banks”.
Gavin Opperman, group business banking director at Virgin Money said: “This grant award is an endorsement of the group’s potential to shake up SME banking and a vote of confidence in our ability to invest in new capabilities.
“The grant will be used to accelerate our existing ambitious growth plans – we are investing in disruptive new capabilities and offering customers the best and most digitally-advanced business bank across the country alongside the globally iconic Virgin brand that’s synonymous with entrepreneurship and business growth.
“This award will transform our business current account into a financial wellness tracker, combining dynamic views across an SME’s working capital cycle, with a set of working capital solutions.
“It will all be backed up by an unparalleled ecosystem of FinTech partners and proactive support from our first-class team of experienced relationship managers, enabling us to fulfil our ambition to help business owners realise their potential and achieve their dreams."
Virgin Money said it hopes to increase lending to SMEs by £2.2bn by the end of 2025, with £100m of that being to companies pursuing environmental, social and governance aims.
It is hoping to attract 20,000 new business customers in the next two years and 100,000 by the end of 2025. 80% of them would be based outside London, it said.
The Capability and Innovation Fund grant will be matched in full by internal investment from Virgin Money.
