Westpac Banking Corporation has acquired Virgin Money’s credit card portfolio and brand licence for $39 million.
The two lenders have previously announced their five-year credit card partnership would not be renewed when it lapsed in May this year.
At the time of that announcement last November, Virgin Money said it was negotiating the purchase of the credit card portfolio.
Instead Westpac will now pay Virgin $39 million over the next 14 months to retain the portfolio and the brand until June 2009.
Under the deal, Virgin Money has agreed not to re-enter the credit or debit card market over the duration of the new agreement.
“This new agreement allows Westpac to continue to manage the customer base and ensures that there are no interruptions to the credit card service,” Virgin said in a statement.
“The Virgin credit card will continue to operate normally for customers.
“During the extended licensing period no new Virgin credit cards will be issued and Westpac will issue customers with a competitive replacement offer.”
Virgin launched the card in 2003 with Westpac providing the funds and the back office administration.
The low interest rate and no-fee credit card gained 800,000 holders and gave Virgin Money six per cent of the credit card market.
Today’s announcement came less than one month after Macquarie Group Ltd, which provides 100 per cent of the funding to Virgin Money’s home loan customers, said it was winding back its retail and wholesale mortgage business.
Virgin said the decision would not affect its home loan business.