Virgin Money has launched a savings account for small businesses, part of the first phase of its SME banking project that it announced last November.

Under current plans, the bank wants to offer business current accounts by the end of 2018, and have a fully functional SME banking division by 2020.

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The savings accounts will be available for instant access, and will pay a rate of 0.60% on deposits. The bank is also enticing business customers with a range of discounts within the wider Virgin group.

Hugh Chater, chief commercial officer at Virgin Money, said: “We know SME business leaders often have to juggle their many business priorities while ensuring their finances are in order. For too long, these businesses have been short-changed with the savings accounts on offer.

“With lots of SMEs not having enough time to shop around for the best deals, many are getting a rough deal and that is why we are entering the market.”

The savings account offering constitutes the entry point into business banking for Virgin Money, which had so far only focused on retail products.

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Virgin Money had first floated the business banking idea 2015, with asset finance as an entry product, but the plans were later shelved due to uncertainty over Brexit.

A new roadmap for developing SME banking was unveiled by Virgin in November 2017. The bank said it would aim for £5bn (€5.7bn) in deposits within five years, with a £500m target for the first year.

During the presentation, chief commercial officer Hugh Chater said: “SME deposits are 50% to 60% cheaper [for banks] than retail deposits. So they not only present an opportunity to increase and diversify our funding sources, but also do this at a reduced cost.”