The Bank of Queensland (BOQ) is set to significantly expand its distribution network after the bank announced it has purchased Virgin Money Australia for $40 million.

BOQ Managing Director and CEO, Stuart Grimshaw, said that the agreement will see the bank make significant inroads into currently untapped customer and market segments.

“The acquisition of Virgin Money Australia immediately delivers increased geographic and income diversity, and allows us to fast track our existing multi-channel distribution strategy through access to an iconic brand and a business with proven capability in online customer acquisition and product distribution,” Mr Grimshaw said.

The deal will see the BOQ have exclusive rights of the VMA brand in Australia for up to 40 years in return for an ongoing royalty.

The agreement will also see a member of Virgin Money take a seat on the BOQ board.

“It will enable us to sell BOQ-manufactured banking products marketed under the Virgin Money Australia brand to customers who would be unlikely to walk into one of our branches, and provides a low risk, high potential entry point into online funds management distribution with an established brand.”

Richard Branson, founder of Virgin, said that the company views Australia as one of its most important markets.

“I am excited that, in partnership with BOQ, we will be able to develop more leading products and distribute them even more widely, so many new customers will get to experience the benefits of Virgin Money. I look forward to Virgin Money Australia becoming a truly national player,” Sir Branson said.