Virgin Money bought by CYBG for £1.7bn

Virgin Money has agreed to be acquired by its rival Clydesdale and Yorkshire Banking Group in a £1.7bn all-share deal that CYBG says will create "the UK's first true national competitor" to the established banks.

Earlier this month, CYBG raised its offer to buy Virgin Money in a deal that would create Britain's sixth biggest bank and become a major challenger to the big five banks.

CYBG has said it will keep the Virgin Money brand, subject to an agreement with Sir Richard Branson's Virgin Group.

Under the terms of the all-share deal each Virgin Money share would be exchanged for 1.2125 new CYBG shares. It will have 9,500 employees, 250 branches and total lending of £70bn.

It said some of those job losses would be achieved "via natural attrition". It would be the main bank for just 2 percent of high street customers compared with around 24 percent for market leader Lloyds Banking Group, according to data from industry body RFi Group.

But the TSB fiasco may well have damaged consumer confidence in these companies being able to provide more customer-friendly tech than the big banks.

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David Duffy, the former CEO of AIB, said the deal will create a lender with the capabilities needed to take on large incumbents.

"The combination of CYBG and Virgin Money will create the first true national competitor to the status quo in United Kingdom banking, offering a genuine alternative for consumers and small businesses", he said in a statement.

"I think we have sufficient scale - the brands, the product and the technology", he said.

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.

"We can be agile enough to deliver a much better deal for the customer".

The group, which will be headquartered in Glasgow, will continue to be chaired by CYBG's Jim Pettigrew, alongside finance chief Ian Smith.

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