Richard Branson is selling his Australian Virgin Money business to Bank of Queensland for $40 million, three years after vowing to take on the big banks through his personal finance arm.
The regional lender said on Wednesday it would snap up exclusive rights to Virgin's brand in Australia, which has more than 150,000 credit card, insurance and superannuation customers.
BOQ will pay $30 million of the deal price in its own stock and about $10 million in cash. It will get exclusive use of Virgin's brand in Australia for up to 40 years.
The lender will also pay Mr Branson's company a royalty and Virgin Group will get a seat on the board of Bank of Queensland.
The deal is the latest chapter in Virgin Money's long-running attempt to grab a bigger slice of the financial services market in Australia, after previous tie-ups with Westpac and Macquarie Bank failed to deliver.
BOQ managing director Stuart Grimshaw said the deal would give the bank a greater chance to sell financial products including home loans and credit cards to a wider range of customers, especially younger people.
While Virgin is currently loss-making, BOQ aims to use the brand as a distribution network to increase its consumer banking market share of about 2 per cent.
"They're growing their customer base at greater than 20 per cent per annum, whereas most banks are struggling to get into single-digit growth of customer numbers," Mr Grimshaw said.
Brian Bissaker, the previous head of Colonial First State, will become chief executive of Virgin Money Australia. The deal would dilute earnings a share by 1 to 2 per cent next financial year because of the extra stock issued, BOQ said.
The deal comes after Mr Branson relaunched Virgin Money in Australia with financial backing from Citi in 2010, vowing to take on the big banks. Citi will continue to provide the "white-label" credit cards under the deal with BOQ. The US bank also provides BOQ's credit cards.