CORRECT: Virgin Money Looks To Shake Up UK Retail Banking

LONDON (Dow Jones)--Virgin Money is looking to shake up the tightly knit U.K. banking sector and attract customers fed up with the country's biggest banks, Chief Executive Jayne-Anne Gadhia said Thursday, after agreeing to pay as much as GBP1 billion to buy Northern Rock from the government four years after the lender's near-collapse.

Gadhia told Dow Jones Newswires that Virgin Money will look to take market share from the "Big 5" banks that dominate U.K. retail banking with better customer service and by focusing on online banking. Rather than a hindrance, she said acquiring just 75 branches from the sale means the bank will be more efficient than peers who have "huge overheads" from extensive and often-underused branch networks.

Virgin Money earlier Thursday was named as the new owner of Northern Rock, five months after Chancellor of the Exchequer George Osborne formally put the bank up for sale.

The financial arm of Richard Branson's Virgin empire had narrowly missed out on buying Northern Rock in early 2008, when the government was considering ways to keep it afloat following a dramatic run on the bank and injection of emergency funds several months earlier. Instead, it was nationalized and restructured into a "bad bank" retained by the government and a smaller, "good bank" that will have around GBP14 billion in mortgage loans and GBP16 billion in deposits when its sale to Virgin Money completes Jan. 1.

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