VIRGIN Money has priced its initial public offering at the lower end of expectations with its shares starting conditional trading on the London Stock Exchange at 283p.

That values the bank at around £1.25 billion, much lower than the initial £2bn figure which had been suggested.

However, unlike other companies, it has managed to complete its flotation in spite of the choppy financial markets. Fellow challenger bank Aldermore was among those which withdrew IPO plans, while Miller Homes was another which abandoned its listing.

Virgin Money said it expects to raise between £312 million and £344m through the flotation. It will receive £150m of that to help grow its share of the mortgage and credit card markets.

Around £162m will be shared between Sir Richard Branson's Virgin Financial Investments, funds managed by WL Ross & Co, Stanhope Investments and members of senior management at Virgin Money as they sell shares.

Following the sale, Virgin Financial Investments will retain around 34 per cent of the ordinary shares in Virgin Money with the WL Ross & Co funds holding 33 per cent.

Staff at the bank, including 200 in Scotland, are being given £1,000 of shares.

Jayne-Anne Gadhia, chief executive, said: "Our capability to deliver growth at meaningful scale, the quality of our balance sheet and the fact that we are unburdened by legacy issues makes us stand apart from other banks. These strengths give us the potential to deliver on-going returns through both capital growth and progressive dividend payments."