Virgin Money has formed a partnership with Citibank to revive the former's local business. Citibank will develop a new credit card to carry the Virgin brand, with a launch planned for early 2010, and will follow that up with a suite of retail financial services products.Virgin Money Australia managing director Matt Baxby said yesterday the alliance with Citibank would go much further than the group's previous partnerships with Westpac and Macquarie Bank.Westpac provided a white label service for the original Virgin credit card, which was launched in May 2003 and attracted more than 500,000 cardholders.But in late 2007 Virgin and Westpac announced that the partnership would be dissolved. Westpac was understood to be unhappy with the terms of the deal.The card had no fees and a low interest rate. Average spend was low and Westpac generated very little revenue.In April last year Westpac paid $39 million to acquire the card portfolio and for the right to use the Virgin brand until June this year.Virgin partnered with Macquarie to launch a home loan in 2006. In May last year it stopped writing new loans after its funding dried up.Macquarie had a 10 per cent holding in Virgin Money Australia but that was sold last October.The only active product in the group's portfolio is its superannuation fund. Baxby, who came to Australia in January after six years at Virgin Money in the United Kingdom, said the company had learned some lessons from its experiences.He said: "The important thing is to have a good strategic fit and economic alignment. Both parties in the new alliance are making a substantial investment."Citibank has an excellent back office operation and a good track record with other partnerships."Citibank has white label credit card arrangements with Suncorp, Bank of Queensland and Cuscal and it issues co-branded cards with Emirates and BP.Its deal with Virgin will be the first involving a comprehensive product portfolio. Baxby said the decision to develop a broader product suite was determined by customer feedback and also by the group's experience in the United Kingdom, where it has had success with a portfolio of retail products.He acknowledged that economic conditions for a new product rollout in early 2010 could be tough but said the retail financial services market was ready for some competition after a couple of years of contraction.In a curious twist, Virgin will not be allowed to offer a new home loan product before October next year. Despite the fact that Virgin stopped lending because Macquarie's funding dried up, its contract with Macquarie stops it from offering an alternative product until the deal expires.