Challenger bank comes out punching

CYBG has formally completed its £1.7 billion takeover of Virgin Money creating a new UK challenger bank and marking the beginning of the end of the historic Clydesdale brand.

The enlarged CYBG is headed by CEO David Duffy. Picture: Robert Perry
The enlarged CYBG is headed by CEO David Duffy. Picture: Robert Perry

The move comes after the two banks, which together hold some £84 billion in assets, received final approval in a court hearing at the end of last week.

Virgin Money’s London-listed shares have now been cancelled, with the all-stock tie-up resulting in 540 million new CYBG shares entering the market.

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Glasgow-headquartered CYBG, which also owns the Yorkshire Bank and B online banking brand, said a combination of the businesses would deliver “what is needed to disrupt the status quo in banking”, with a national footprint that is double the size of any other challenger bank.

It confirmed that the retail brand for the combined group would transition to the Virgin Money name over the next three years, bringing an end to the centuries-old Clydesdale Bank name on Scottish high streets.

Following the deal’s completion, a number of senior personnel changes have taken place.

They include the departure of Virgin Money chairwoman Irene Dorner and chief executive Jayne-Anne Gadhia, though Gadhia has agreed to work as a senior adviser to CYBG boss David Duffy over the next 18 months.

He will be supported by CYBG finance chief Ian Smith, while Virgin Money’s chief financial officer Peter Bole will become group integration director to help with the changes across both businesses.

Hugh Chater, managing director of the core bank of Virgin Money, meanwhile, will be responsible for the day-to-day operation of the Virgin Money business.

Duffy said the deal will help the group compete with larger rivals, which include the likes of Barclays, Lloyds and RBS.

“Today marks an historic milestone for CYBG and Virgin Money, creating the first true national competitor to the status quo in UK banking with a clear ambition to provide customers with the best service in the UK,” he said.

“Bringing the two banks together creates the UK’s sixth largest bank combining strong product, service and technology capabilities alongside an iconic brand with well-known consumer champion credentials.

“This is a unique combination that will enable us to compete with the large incumbent banks.”