THE initial public offering (IPO) for Newcastle-based Virgin Money is now officially back on the table, after the lending bosses now vow to float by the end of November, writes Samantha Dolby of Brewin Dolphin.

Sir Richard Branson, who part-owns Virgin Money alongside US billionaire, Wilbur Ross, had originally announced plans to float the shares on the London Stock Exchange in October, but then took prudent steps to postpone the listing due to recent volatile market conditions.

The ‘will they, won’t they?’ approach to the Virgin Money IPO has been an interesting one to watch from an investment manager’s point of view.

With their eyes still on the prize of a float, this stalling tactic has cost the firm dear, forcing the bank to lower its valuation for the revived listing to between £1.25bn-£1.45bn at around 283p-333p per share, which undershoots the previous £2bn that the lender was hoping to achieve.

Once the share listing is complete, the bank will also then hand over £50 million to the Treasury due to a deal agreed when Virgin acquired assets of defunct lender Northern Rock plc. to the tune of £747m in late 2011.

However, the delay may well have been the right one for those at the helm of Virgin Money. Recent weeks have not only been blessed by more stable market conditions, but banks also breathed a collective sigh of relief as the Financial Policy Committee (FPC) of the Bank of England made their long-awaited announcement on the banking leverage ratio on the 31st of October .

The leverage ratio is just one of several measures intended to guard against a repeat of the tax-payer funded bank bail-outs of recent years. It is a measure of the losses a bank can realistically sustain before its shareholders are wiped out and causing it to fail.

The FPC said it wanted big UK banks to hold capital equal to 4.05 per cent of their assets from 2019 onwards, up from 3 per cent now. That could be increased in boom times by an extra buffer of another 0.9 per cent to guard against the economic cycle.

Some industry executives had worried that the leverage ratio could be set well above 5 per cent constraining lending, so the Bank of England announcement prompted wide-spread relief sending shares of leading British banks surging in the process.

Virgin Money had a leverage ratio of 3.8 per cent at the end of June, putting the bank within the recommended requirements and in a strong position to now take the IPO forwards.

If the floatation goes according to plan at the end of the month, Virgin Money will continue the trend in North Eastern stock market accomplishments.

The successful debuts experienced by companies such as Applied Graphene and Kromek, who followed hot on the heels of stellar performer Utilitywise, must also be reassuring to those considering it. Established names such as Go Ahead and Bellway show that stock market longevity in the region is indeed achievable.

Samantha Dolby is an Investment Manager at Brewin Dolphin in Newcastle. For more information email samantha.dolby@brewin.co.uk or visit www.brewin.co.uk/newcastle