Virgin Money in trouble

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From
Virgin Money Australia card worries | NEWS.com.au Business

MACQUARIE Bank and Sir Richard Branson will have to stump up more cash for their Virgin Money Australia joint venture if it is to continue as a going concern.

In an audit statement contained in the consolidated accounts of Virgin Money Australia (VMA) for 2007, KPMG partner Malcolm Ashcroft noted that the group's profitability had been undermined by the global liquidity crisis.


"In the event that the company's shareholders do not continue to provide financial support beyond existing commitments in future periods, there is uncertainty the company will be able to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report."

The uncertainty surrounding the continuation of the business comes after it reported a net loss of $3.3 million for the 12 months to the end of March.


In notes to the financial accounts, the group's directors revealed that the business had a deficiency of capital and reserves of $5.3 million.


This means the Australian entity is balance sheet-insolvent and poorly positioned to fund acquisitions in the local financial services industry unless it can secure additional funding.

[Arthur Hodgson]

Things will only get worse when the full extent of the sub-prime problem hits the fan.

[oz_mark]

More trouble for them....

Westpac ends credit card deal with Virgin | smh.com.au

Westpac ends credit card deal with Virgin

WESTPAC has severed its five-year credit card partnership with Sir Richard Branson's Virgin Money business as a result of growing competition between the two operators.

Their original deal was due to come to an end next May, but neither company appeared willing to renew it despite the success they had enjoyed in launching from scratch a Virgin-branded low-interest-rate and no-fee credit card that now has 800,000 holders. That has given the partners a 6 per cent share of the overall card market, which Virgin wants to push to double figures over the next five years.