Clydesdale banks on Branson brand appeal in Virgin Money merger

Lloyd Doyle
June 18, 2018

CYBG, owner of Clydesdale Bank, Yorkshire Bank and B Brands, has agreed to buy Virgin Money for £1.7billion.

The deal adds to a number of transactions among a handful of smaller banks in the United Kingdom as they seek to raise funds and steal business from Britain's top-four lenders.

If the deal goes ahead, CYBG and Virgin Money, which was founded nearly 25 years ago by British entrepreneur Sir Richard Branson, would combine to create Britain's sixth largest bank by assets, albeit one still dwarfed by the big five banks.

Under the terms of the all-share deal each Virgin Money share would be exchanged for 1.2125 new CYBG shares.

CYBG said: 'As a result of the significant operational overlap between CYBG and Virgin Money, the combined group will be able to reduce the duplication of roles'.

Virgin Money shares rose more than 2 percent before paring their gains to trade little changed at 355p by 0810 GMT.

CYBG said the combined group would have about 9,500 employees, but it meant to reduce that total by about one-sixth, suggesting about 1,500 jobs would go. Owners of the Branson company will own about 38% of the combined group.

Branson is expected to rake in royalties of at least £15million a year after the first four years that the combined group operates.

Virgin Money was founded in 1995 and expanded in 2011 when it bought the remains of Northern Rock for about £747m.

Clydesdale's chief executive David Duffy, who will lead the merged business, said the deal aimed at capitalising on Virgin's highly-rated brand in an environment in which banking is being transformed by the shift towards "open" banking - a system that allows customers more control over their financial data.

It said the deal will create Britain's sixth-largest bank and will be a new challenger to the country's top four lenders.

Mr Duffy will retain his current position in the combined group, as will CYBG chairman Jim Pettigrew. Jayne-Anne Gadhia, CEO of Virgin Money, will stay on as an adviser for an unspecified time.

Other reports by Iphone Fresh

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