Sir Richard Branson's foray into U.K. financial services is gathering speed, but in this country, he needs a new driver.

In the two and a half years since Sir Richard's Virgin Group Ltd. bought CircleLending, a Waltham, Mass., company that arranges loans between friends and relatives, the unit has gone around in a circle. Renamed Virgin Money Holdings USA Inc., it tried to break into mainstream mortgages by buying a wholesale lender, only to sell that business one year later. And in June, Virgin Money lost its chief executive.

Today, the outfit says it is close to hiring a successor CEO and looking at ways to beef up its product offerings, potentially by partnering with a big U.S. bank. And analysts say Virgin may yet prove to be a viable competitor, especially among young consumers who identify with its smart, hip image.

"Consumer sentiment is not in favor of the large banks right now," said Ron Shevlin, a senior analyst at Aite Group. "Virgin has a very good brand. There is no question about it."

Sarah Dekin, a spokeswoman for Virgin Money, said the company is exploring a number of ways to expand its offerings.

"It is our ambition in the coming year to be a stronger player in the consumer financial services space," she said.

"And that isn't necessarily going to be through acquisition," the path Virgin's U.K. financial services arm is taking.

Last week Virgin Money U.K. offered to buy a regional lender, Church House Trust, for about $19.6 million. The Daily Telegraph reported this week that Virgin is also making another push to buy the beleaguered Northern Rock, which it had tried to acquire before the British government took over the bank in 2008. (Virgin Money also has operations in Australia and South Africa.)

Dekin said Virgin Money is in discussions with a number of big U.S. banks about partnering to bring new services to their client base. "Buying a bank is another opportunity, and I wouldn't rule it out, but it isn't a single focus," she said.

Jim Eckenrode, a banking research executive at TowerGroup, said it's more likely Virgin Money would pursue a banking license in the U.S. than partner with another bank. "It's somewhat against the DNA of the company to do a partnership like that," he said. "Branson has said he wants to change the dynamic around retail banking, and certainly this is a very large and attractive market."

When Virgin Money bought CircleLending in 2007, its founder and CEO, Asheesh Advani, said his company would be a "launching pad to brand Virgin in the U.S." in financial services, and that its first new product would be a direct mortgage.

The company got a foothold in that business by taking over Lendia LLC, a Marlborough, Mass., wholesale lender, in June 2008. At the time, Advani said the purchase would help him broaden distribution of the peer-to-peer product and develop an offering that combined such loans with traditional mortgages.

The wholesale business seemed to be do well under the Virgin umbrella. Several months after the acquisition, Advani told National Mortgage News that it had more than doubled its volume and client base of brokers. Yet, a short time later, both the wholesale lending business and Advani were gone.

In June 2009, Advani left the company to pursue entrepreneurial ventures. He now splits his time between the U.S. and Bangalore, India, working on a financial services and new-media-related venture.

In the fall, Virgin Money sold Lendia back to its founder, Greg O'Connor, who had been working at Virgin as an executive vice president. Dekin said Virgin wanted "to focus our resources exclusively on the direct-to-consumer market." O'Connor, who renamed his company ClearPoint Funding Inc., did not return calls seeking comment.

Analysts said they were not surprised that Virgin Money quit the brokered-loan business, whose reputation was tarnished by the real estate crash.

"A lot of people are looking to get out of wholesale lending," Eckenrode said. "The whole broker model is broken."

Dekin said the board is close to finishing its search for a new CEO and that an announcement is likely in the next few weeks. The company expects it to be an external appointment and is considering only candidates with a background in financial services.

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