Virgin Money bought by Clydesdale bank owner CYBG for €1.9bn
Former AIB chief David Duffy to lead what will be UK’s sixth-largest bank
The takeover by Clydesdale and Yorkshire of Virgin Money is set to create the first true national competitor to the UK big five banks. Photograph: Russell Cheyne/Reuters
The owner of Clydesdale and Yorkshire banks is to take over Virgin Money in a £1.7 billion (€1.94 billion) deal, creating the UK’s sixth-largest bank with 6 million customers.
Clydesdale and Yorkshire Bank Group (CYBG) agreed to pay 1.2125 new shares in exchange for each Virgin Money share. Based on Friday’s closing price of 306p, this values each Virgin Money share at 371p.
The deal brings together the UK’s two largest challenger banks, creating the first true national competitor to the big five. It will have 9,500 employees, 250 branches and total lending of £70 billion.
CYBG clinched the deal after offering Virgin Money shareholders a larger stake in the combined group, of 38 per cent. CYBG will pay a fixed royalty to keep the Virgin Money brand, starting at £12 million in the first year and rising to £15 million in the fourth year.
After the recent fiasco at TSB caused by a botched IT migration, CYBG stressed that there would be no “big bang” move of Virgin Money customers to its platform on day one. The transfer will be phased over three years.
Dubliner David Duffy, former head of AIB, and chief executive of CYBG, told the BBC’s Today programme: “We’re going to become a competitor of scale.”
He added that “technology and agility” were the factors that would decide the future of banking.
“I think we have sufficient scale – the brands, the product and the technology,” he said.
“We can be agile enough to deliver a much better deal for the customer.”
Mr Duffy will retain his current position in the combined group, as will CYBG chairman Jim Pettigrew.
Virgin Money chief executive Jayne-Anne Gadhia, who has led the bank for more than 10 years, will become a senior adviser to the chief executive, Mr Duffy.
Virgin Money’s founder, Sir Richard Branson, who owns a 35 per cent stake, will make a large profit on the sale, seven years after he led a controversial £747 million buyout of Northern Rock – later rebranded Virgin – after its rescue by the taxpayer. – (Additional reporting: the Guardian, Reuters)