CLYDESDALE Bank-owner Virgin Money has said it is providing £500 million for potential loan losses to reflect the impact of the coronavirus on the economy and signalled it may close more branches in Scotland.

The Clydesdale name is set to disappear from Scotland’s streets by the end of March under plans to rebrand remaining branches as Virgin Money outlets.

READ MORE: Clydesdale owner under fire over plan to close branches across Scotland as 100 job losses loom

The group said it has no plans to stop issuing Clydesdale Bank notes. It is to stop supplying them to other banks such as Santander for use in their cash machines.

Virgin Money said it has yet to see any material impacts of the pandemic on the credit quality of its loan book.

However, chief executive David Duffy said the group was taking a cautious and conservative approach amid uncertainty about the economic outlook and the impact of the second lockdown.

He added: “Although the vaccine news is a strong cause of hope for the future, the economic benefits are still some way off when considering the immediate reality of current restrictions and so haven’t yet been factored into our near-term forecasts.”

While the impairment provision left Virgin Money in the red, Mr Duffy insisted the group’s long term prospects are good.

He remains confident that Virgin Money, which also owns Yorkshire Bank, can gain ground on the high street banking giants that dominate the personal and business banking markets.

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Directors believe the company can capitalise on the Virgin Money brand and on advances in digital technology to win customers while increasing profitability.

The group has 55 branches in Scotland following a closure programme that has seen the network shrink dramatically in recent years.

The group came under fire in July after reactivating plans to close seven branches that it had put on hold because of the coronavirus.

The latest closures were expected to result in around 100 jobs losses in Scotland.

Asked yesterday if Virgin Money planned any further closures in Scotland, a spokesperson for the group said: “Branches remain an important part of what we do. We always need to strike a balance between the digital services we offer and a branch network that meets the needs of our customers.”

The spokesperson added: “We will always respond to changing customer behaviour and will continue to review transaction levels, commercial performance, lease details and general usage levels by customers and will make changes as required across the whole UK network.”

In October Virgin Money announced plans to shed up to 200 head office jobs in Glasgow.

The cuts are being made under a rationalisation and integration process that was launched following the £1.7 billion takeover of Virgin Money by the former Clydesdale and Yorkshire Bank Group (CYBG) in 2018.

Stock market-listed CYBG rebranded as Virgin Money in October last year.

When the programme was launched it was expected to result in a 16 per cent reduction in employee numbers. The process is due to be completed by the end of September next year.

The group said yesterday it had a significant opportunity to reduce costs further through digitisation and changes that would help it increase efficiency.

Virgin Money has around 5,000 employees in Scotland, including 2,200 in the Glasgow head office.

The group lost £168m before tax in the year to September 30, compared with a loss of £265m in the preceding year.

It said its performance had been impacted by Covid-19 dynamics in various ways.

Business lending rose by 13.6%, to £8.9bn, “due to £1.2bn of Government-backed lending”.

The group achieved strong growth in personal lending in the first half but demand fell in the second half. Personal lending increased by 3.9% overall to £5.2bn.

Virgin Money said a 3% fall in mortgage lending, to £58.3bn, reflected the impact of the lockdown on the market in the second half following disciplined pricing in the first six months.

READ MORE: Clydesdale owner prepares for increase in mortgage bad debts

“Relationship deposits grew 20.3% to £25.7bn as consumer savings increased significantly under lockdown and businesses generally deposited the proceeds from Government-guaranteed lending into short-term cash accounts,” noted Virgin Money.

The group said it was well-positioned for an uncertain outlook, with a strong balance sheet.

Virgin Money shares closed down 7p at 140p.

The group’s annual report shows Mr Duffy’s total remuneration fell to £1.35m in the latest year, from £3.3m in the preceding period.

It says Mr Duffy was not paid a bonus in the latest year because of the Covid-19 coronavirus’s impact on the group’s overall financial performance.

His remuneration in the preceding year included a £0.45m bonus and a £1.3m award related to the demerger of CYBG from its former owner National Australia Bank in 2015.

In the report the group states: “We have made good progress towards the straightforward, single brand of Virgin Money. As part of this work, where we used to provide a service to supply Clydesdale Bank-branded banknotes to certain institutions, this service is now being taken forward by other Scottish banknote issuers. However, we continue to dispense Clydesdale Bank notes from our Scottish stores and ATMs.”