Richard Branson bank to site new HQ in Edinburgh

Published on Monday 6 September 2010 23:45

THE Scottish finance industry received a much-needed boost yesterday as two firms unveiled plans to create hundreds of jobs north of the Border, reversing a recent downward trend that threatened the country's reputation as a major banking centre.

• Richard Branson. Pic PA

As First Minister Alex Salmond announced Barclays was to open an investment banking hub in Glasgow with the creation of 600 new posts, Virgin Money revealed it intended to base its new operations centre in Edinburgh, a move that will generate an initial 200 jobs, with hopes high that the number will grow.

Virgin Money chief executive Jayne-Anne Gadhia told The Scotsman the company was looking for city-centre premises for a new operations office, with recruitment of staff expected to begin next year.

Ms Gadhia, who used to work for Royal Bank of Scotland at St Andrew Square, said Virgin Money had chosen Edinburgh because "there is nowhere better in the UK to set up a growing bank".

She also signalled her company's intention to become a major player in the city's cultural life by exploring the possible sponsorship of the International Festival Fireworks Concert.

Bank of Scotland has spent 4 million sponsoring the event over the past 16 years, but its withdrawal leaves a funding gap of more than 250,000.

The brighter employment news came in the wake of a dreadful two weeks for Scottish financial services, as RBS announced the closure of its Direct Line insurance office in Glasgow along with plans to slash 3,500 jobs across the UK ahead of longer-term job creation in Scotland.

Standard Life also revealed plans to cut hundreds of jobs, many of them in Edinburgh, and senior business figures warned the capital had yet to experience the full effects of the banking crisis, with professional services at risk of being hit by a migration of top earners to London.

Yesterday's news was greeted with delight by politicians and industry, with Scottish Secretary Michael Moore insisting it was a "real sign of encouragement for Scotland's economy".

Virgin Money is a bank and financial services company that grew out of the Virgin Direct business set up by Sir Richard Branson in 1995. It currently has three million customers in the UK and its range of products includes insurance, personal loans and the Virgin credit card that is used by 2.2 million people. Eventually, the company hopes to be able to offer a full range of financial services, including mortgages, investment services and a wider range of savings accounts.

At the moment, the firm has a small head office with 60 staff in Edinburgh, but Ms Gadhia said she believed the city's history as a home to financial services meant there would be a well-educated and experienced pool of potential staff for the new bank to recruit from.

Her organisation intends to start hiring up to 200 staff at the end of the first quarter of 2011, and Ms Gadhia hopes the number of jobs will continue to rise as the bank grows.

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"The big new decision is that Edinburgh will be our operational centre," she told The Scotsman. "The head office will also be in Edinburgh.

"I used to work at the Royal Bank of Scotland when it was in St Andrew Square and I remember when we moved to Gogarburn – lovely as it was, people don't like to work out of town. I think there is nowhere better in the UK to set up a growing bank."

She added: "It is certainly good news for Edinburgh in terms of jobs. Given the town's history in financial services, it is great to be able to make the most of that experience."

Ms Ghadia was disappointed Virgin Money had failed to buy Williams and Glyn's bank from RBS. If the bid to buy the bank, which specialises in small business accounts, had been successful, she said a great number jobs could have been saved. Last week, RBS said at least 1,000 of the jobs to be cut were due to the sale of 318 Williams and Glyn's branches.

She also signalled Virgin Money's commitment to Edinburgh by suggesting it could be in the running to take over as the headline sponsor of the Festival Fireworks Concert in the wake of the decision by Bank of Scotland to discontinue its support.

"We think it would be a terrible thing if the fireworks concert didn't happen – and we are currently thinking of everything we can do to help," she said.

After the announcements, Mr Moore said: "This is welcome news for the financial sector in Scotland. We have become used to hearing bad employment news as a result of the recession, and the announcement of these jobs and the investment which goes with it is a real sign of encouragement for Scotland's economy."

But he added: "We can't afford to be complacent about securing our future stability and will continue to work hard across government to get our economy back to a healthy state."

Finance secretary John Swinney said the Virgin announcement was "a clear reflection on the superb skills of the workforce in Edinburgh and across Scotland", adding: "It also highlights the competitive advantage provided by the supportive business environment we are creating by working together across the public and private sector.

"The Scottish Government is determined to continue to support Scotland's financial services industry in maintaining its real strengths and adapting to change – and I had a very positive meeting with Jayne-Anne Gadhia last week where this powerful commendation of Edinburgh as a financial centre was clearly expressed."

Owen Kelly, chief executive of trade body Scottish Financial Enterprise, said: "Restructuring continues in the industry, so it would be wrong to say that the effects of the financial crisis are wholly behind us, but after a period of turbulence, it is great to see growth in areas of banking such as international custody and asset servicing, as well as in retail, with exciting new providers such as Tesco Bank and Virgin Money."

Mr Kelly said that, despite the recent employment gloom, Edinburgh remained an attractive location for employers.

"Scotland is an attractive location for financial services companies because of its enduring strengths – an international outlook with good connections, a strong and diverse skills base and a very high quality of life," he said.

That message was echoed by Ron Hewitt, chief executive of Edinburgh Chamber of Commerce, who insisted the recent bad news for the financial sector in the capital did not represent a collapse of the industry."Just as there are jobs being lost, there are also jobs being created," he said.

Edinburgh Central MSP Sarah Boyack said: "This is fantastic news for the financial sector and a testament to the skill and quality of the workforce in the city. It is particularly good news given the spate of job losses announced by other banks."