Clydesdale Bank and Yorkshire Bank owner CYBG has confirmed that it has agreed to buy financial services brand Virgin Money for £1.7bn, a move that will create one of the largest banks in the UK.
The deal includes an agreement over shareholders, with Virgin Money’s shareholders set to receive 1.2125 new CYBG shares for each Virgin Money share that they hold. The financial services firm’s shareholders will own 38% of the newly merged bank.
With Virgin Money’s total number of customers standing at 3.3 million and CYBG’s at 2.8 million, the new bank will have 6 million customers, making it the sixth largest bank in the UK. Currently, CYBG has 169 branches in the UK, while Virgin Money has 74 branches.
Under the new takeover agreement, CYBG will continue to use the Virgin Money brand, with the bank using the brand when providing small business, corporate customers and retail customers with financial services.
There will be a fixed yearly minimum royalty of £12m for the continued use of the Virgin Money brand, which will increase to £15m after the new bank has been running for four years. Royalties could continue to rise in the fifth year if the bank reaches a set turnover amount the previous year.
Commenting on the benefits of the takeover, CYBG’s Chief Executive David Duffy said: “By combining two of the UK's leading challenger banks, we will create a national, full-service bank with the capabilities needed to compete effectively with the large incumbent banks.”
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