Published: Mon, June 18, 2018
Markets | By Otis Pena

Clydesdale name to go in Virgin bank deal

The owner of Clydesdale Bank and Yorkshire Bank, CYBG, has agreed to buy Virgin Money for £1.7bn, which is likely to lead to more than 1,500 job losses.

The deal, on the same terms as CYBG's sweetened bid in June, will see Virgin Money shareholders receive 1.2125 CYBG shares per Virgin Money share and own approximately 38% of the combined group.

The group - which will have its headquarters in Glasgow - will see CYBG's Jim Pettigrew continue on as chairman alongside finance chief Ian Smith.

CYBG said it had improved its all-share offer for Virgin Money by raising the exchange ratio by seven per cent, an increase which analysts said should be enough to get the deal over the line.

"It is now expected that the total number of FTEs of the combined group, being approximately 9,500 FTEs, will reduce by approximately 16%, some of which will take place via natural attrition".

Virgin Money was formed in a partnership between Virgin Direct and Norwich Union in 1995, and its Norwich office in Whiting Road is home to its in-house design studio.

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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 the nation's top lenders.

"We. look forward to helping the combined business rebrand to Virgin Money", he said, welcoming Duffy and CYBG employees to the group. It will be better placed to compete with established British bank names like Barclays, HSBC, Royal Bank of Scotland, Lloyds Banking Group and Santander.

"It is vital that the skilled and experienced workforce are given assurances that branches and contact centres will not be closed leaving customers without their much valued access to local banking".

It will create Britain's sixth-largest bank by assets, around twice the size of its largest rival and with the firepower of the Virgin brand, which the combined group will pay a royalty to keep.

"By combining two of the UK's leading challenger banks, we will create a national, full-service bank with the capabilities needed to compete effectively with the large incumbent banks", Duffy said in the statement.

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