Clydesdale and Yorkshire bank to re-brand as Virgin Money
Virgin Money has completed their takeover offer from CYBG, in a deal said to be worth around £1.7bn. The all-share takeover means that the owners of Clydesdale and Yorkshire bank brands will become the UK’s sixth-largest banking chain. However, the deal could see the loss of up to 1,500 jobs.
Virgin’s shareholders will retain a 38% stake in the new combined group, and the Virgin Money brand will be the one that customers see going forward. Clydesdale Bank and Yorkshire Bank branches will be re-branded.
We take a look at how the deal worked out, and what it means going forward for the new challenger brand.
Virgin Money and the CYBG brands make up two of the biggest challenger banks in the UK. Their merger makes them the sixth-largest chain in the country, behind the big five of HSBC, Barclays, Lloyds, RBS, and Santander. There had been a previous offer on the table, agreed in principle back in June, but it was only on Monday that the deal was finalised.
Virgin Money and the CYBG brands make up two of the biggest challenger banks in the UK.
Despite their hopes of changing the landscape of UK banking, shares in CYBG fell to a three-month low just ahead of the completion of the takeover. Tough market conditions are to blame. Even with their combined firepower, the new chain may struggle to compete with its bigger competitors.
All of CYBG’s retail customers will be moved over to the Virgin Money brand, according to the firm. However, the rebranding effort is said to cost around £60m. Despite this high cost, the intention of the deal is to save an annual £120m overall. Part of this cost-saving action is to reduce the workforce by around 16%. CYBG have licensed the Virgin Money brand for a fee of around £12m a year, with additional royalties. These royalties will go directly to the firm’s founder, Richard Branson.
…the rebranding effort is said to cost around £60m
The combined banks had around 9,500 employees across 250 branches, although how many of these will close, if any, remains to be seen.
The Future of Virgin Money
As we mentioned in the introduction, this new merger plans to re-brand existing CYBG properties to Virgin Money. This could well mean the end for two of the most recognised names in British banking. Clydesdale Bank has been around since 1838, and Yorkshire Bank since 1859. Many customers feel that these institutions form part of their regional identity.
Some sources have suggested that the two brands could be kept for small and medium-sized business banking, but the exact plans are yet to be unveiled.
Many are suggesting that other challenger banks could merge in a similar way. In a time of weak economic growth and increased competition, it seems sensible. However, any move that gives consumers more choice is surely a good thing.