A combination of Clydesdale owner CYBG and Virgin Money will be headquartered in Glasgow, create a new competitor to Britain’s biggest banks under the latter’s branding but spark some 1,500 job losses.
The Clydesdale name, which can trace its roots back almost 200 years, is set to be phased out on the retail banking side under a brand licensing agreement struck with Sir Richard Branson’s Virgin Group.
CYBG, which also owns the Yorkshire Bank and B digital banking service, said the deal would see each Virgin Money share exchanged for 1.2125 shares in the new combined group. It values each Virgin Money share at around 371p and the entire group at some £1.7 billion.
CYBG’s David Duffy will stay on as chief executive, leaving Virgin Money boss Jayne-Anne Gadhia to serve in a consultancy role as his senior adviser for a period of time and on “terms to be agreed”.
The enlarged group will see CYBG’s Jim Pettigrew continue on as chairman alongside finance chief Ian Smith.
The firms said they recognise “that there will be a loss of jobs” as a result of the takeover, likely to number about 1,500 over three years.
The bulk of the cuts will affect senior management positions, as CYBG has said there is “very little in overlap” in customer-facing roles.
“As a result of the significant operational overlap between CYBG and Virgin Money, the combined group will be able to reduce the duplication of roles, leading to a decrease in the total number of FTEs [full-time equivalent employees].
“It is currently expected that the total number of FTEs of the combined group, being approximately 9,500 FTEs, will reduce by approximately 16 per cent, some of which will take place via natural attrition.”
Rob MacGregor of trade union Unite said: “The purchase of Virgin Money… will change the face of banking in many high streets across the country.
“It is vital that the skilled and experienced workforce are given assurances that branches and contact centres will not be closed. Unite is now seeking an urgent meeting with… David Duffy in order to secure assurances about the employment of the dedicated women and men across the county.”
The banks said that the tie-up would effectively bring the combined group out of the challenger market, making it a real competitor to the big lenders.
Duffy said: “The combination of CYBG and Virgin Money will create the first true national competitor to the status quo in UK banking, offering a genuine alternative for consumers and small businesses.”
Donald Tosh, divisional director at Brewin Dolphin Glasgow, said: “A range of economic data has shown that the UK economy is beginning to stutter, so it will be more important to watch what and to whom the wider business is lending, rather than just how much it is lending.”