CYBG confirms £1.7bn Virgin Money takeover
As reported last month, CYBG made an offer and Virgin Money confirmed the preliminary approach.
Today (18 June), David Duffy, chief executive of CYBG, says: “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.”
The combined entity will have six million personal and business customers and a balance sheet of almost £70 billion. It will also become Britain’s sixth-largest bank by assets.
According to the duo, CYBG shareholders will own c. 62% of the enlarged group with Virgin Money shareholders owning c. 38%.
UK trade union Unite, representing the workforce at Virgin Money and also staff at CYBG, has “expressed alarm at the prospect of thousands of job cuts”.
According to Unite, this deal could result in a 16% reduction in the combined workforce – around 1,500 job losses.
Rob MacGregor, Unite national officer, says: “Thousands of banking employees have this morning [18 June] heard through the media that their jobs are no longer secure.”
Unite says the combined workforce of both institutions is 9,500.
Away from job cuts, both CYBG and Virgin Money make a lot of noise about being “challenger banks”, yet Virgin Money was founded in 1995. It expanded its business in 2011 when it bought the remnants of Northern Rock for £747 million.
In turn, CYBG is a holding company that owns Clydesdale Bank, Yorkshire Bank and the app-based bank B. It was formed by National Australia Bank (NAB) in February 2016.
CYBG brings its retail and SME franchises and states that its “open banking ready” digital platform is live in the market today.
“Immediate preparations” will be made to rebrand the group’s entire retail operation to the Virgin Money brand, with the rest of the customer base transferring to this brand “in due course”.
There will also be a migration of Virgin Money customers to CYBG’s platform. CYBG is a long-standing user of a heavily customised version of Misys’ (now Finastra) Equation core banking system.
This means the end of the road for the 10x Future Technologies project at Virgin Money, which got the deal to build the bank’s new banking platform last year. 10x is a UK-based tech start-up founded by former Barclays CEO Antony Jenkins, with Virgin Money being its only known customer.
There will be no “big bang” migration to the CYBG platform. The transfer will be phased over a period of three years.
CYBG says this technology platform is scalable and has already seen the migration of over two million of its customers “without issue”.