- CYBG’s takeover of Virgin Money will create the UK’s 6th largest bank
- Virgin Money shareholders will own 38 per cent of the combined group
- 1,500 senior management jobs are at risk due to a ‘significant overlap’
CYBG, owner of Clydesdale Bank, Yorkshire Bank and B Brands, has agreed to buy Virgin Money for £1.7billion.
The takeover, confirmed by the banks this morning, will create the UK’s sixth largest bank with assets of more than £70billion and more than six million customers.
The firms admit ‘there will be a loss of jobs’ as a result of the deal with the bulk of the cuts impacting senior management staff.
The CYBG deal values Virgin Money at around £1.7bn. Shareholders will own 38% of the group
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.’
The group currently has around 9,500 full-time employees and expects to reduce this by around a sixth, equating to around 1,500 people.
Under the terms of the agreement, each Virgin Money share – valued at around 371p – will be exchanged for 1.2125 shares in the new combined group.
Virgin Money shareholders will own approximately 38 per cent of the group, which exceeds the bank’s previous offer of around 36.5 per cent.
Virgin Money boss Jayne-Anne Gadhia will serve as an adviser to group CEO David Duffy
The bank has also agreed with Sir Richard Branson’s Virgin Group to retain the Virgin Money brand.
Branson is expected to rake in royalties of at least £15million a year after the first four years that the combined group operates.
CYBG’s David Duffy will stay on as chief executive, and Virgin Money boss Jayne-Anne Gadhia will serve in a consultancy role as his senior adviser.
The group, which will be headquartered in Glasgow, will continue to be chaired by CYBG’s Jim Pettigrew, alongside finance chief Ian Smith.
The banks said that the deal would effectively bring the group out of the challenger market and make it a real competitor to leading lenders.
Gadhia said: ‘This is a compelling deal for our shareholders, that accelerates value delivery and represents the beginning of the next chapter of the Virgin Money story.’
Virgin Money was founded in 1995 and expanded in 2011 when it bought the remains of Northern Rock for about £747m.
CYBG shares were trading higher at around 0.6% in early trading, while Virgin Money shares were up as much as 2.4%.