CYBG and Virgin Money Complete £1.7bn Takeover

Clydesdale and Yorkshire bank to re-brand as Virgin Money

October 27, 2018
CYBG and Virgin Money Complete £1.7bn Takeover
CompareBanks is reader-supported. When you click through some links on our site, we may earn an affiliate commission. Learn more

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.

Merger Details

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.

Matt Crabtree
Matt Crabtree
Hi, I'm Matt and I'm an author here at CompareBanks. I write about a range of topics including UK bank stories and the latest news in the banking world. If you'd like to get in touch, feel free to send me an email using the link in my bio.

Related Articles

Lloyds Declares Dividend; Buys Retirement Platform
Lloyds Declares Dividend; Buys Retirement Platform
Lloyds Banking Group has announced its latest financial results, with a £2 billion...
July 30, 2021
Tesco Bank Closing All Current Accounts
Tesco Bank Closing All Current Accounts
Tesco Bank has announced that it is to close all of its current accounts that customers...
July 27, 2021
Major Banking Websites Down On Thursday
Major Banking Websites Down On Thursday
A number of major banking websites in the UK and globally were unavailable for around...
July 22, 2021
Lloyds Group Suffers Online Outage
Lloyds Group Suffers Online Outage
Thousands of customers were left unable to access their Lloyds Bank, Halifax and...
July 20, 2021

Mentioned Banks

About Barclays Bank Barclays is a British multinational investment bank and financial services company. It was founded in 1690 and is headquartered in London. Barclays originated...
Learn More
About Clydesdale Bank Clydesdale Bank is a Scottish commercial bank founded in Glasgow in 1838. Independent until 1920 when it was purchased by Midland Bank, it is the smallest of...
Learn More
About HSBC Bank HSBC is a British banking and financial services company. It is the largest bank in Europe and the seventh largest bank in the world. The bank originated in Hong Kong...
Learn More
About Lloyds Bank Lloyds Bank is a British retail and commercial bank. One of the ‘Big Four’ clearing banks, it was founded in Birmingham in 1765. It is the largest retail bank in...
Learn More
About RBS RBS, or Royal Bank of Scotland, is a retail banking subsidiary of the Royal Bank of Scotland Group. The Group’s other retail subsidiaries are NatWest and Ulster Bank....
Learn More
About Santander Santander UK is a British bank. Though it is a British company and autonomously managed, it is entirely owned by the Spanish Santander Group. Santander is one of the...
Learn More
About Virgin Money Virgin Money is a bank and financial services company based in the UK. Originally launched as Virgin Direct Personal Financial Services in 1995, its second incarnation...
Learn More

Comments

Leave a Comment