The owner of Clydesdale Bank and Yorkshire Bank, CYBG, has agreed to buy Virgin Money for £1.7bn.
It was announced earlier this month that the owner of Clydesdale and Yorkshire banks was said to be putting forward a revised bid which is said to be higher than the group’s initial offer of £1.6bn made in May.
Under the deal, all the group’s retail customers will be moved to Virgin Money over the next three years. While, Jayne-Anne Gadhia, chief executive of Virgin Money, will be stepping down from her current role and acting as a senior adviser to the chief executive in a consultancy role.
It will be the UK’s sixth-largest bank, with about six million customers, but 1,500 jobs are likely to go.
It’s been said by both companies that they believed the deal would create the UK’s “first banking competitor”.
This merger could be significant for the UK banking sector, and could come as a challenger to the traditional big five banks in the UK – Barclays, HSBC, Lloyds, RBS and Santander.
However, challenger banks have had a difficult time in the past, with TSB being hit by a major IT crisis in May and the Co-op bank being rescued by a group of US hedge funds last summer – after posting a pre-tax loss of £174.4m for 2017, compared to a loss of £477.1m a year earlier.
CYBG said it had agreed with Sir Richard Branson’s Virgin Group to license the Virgin Money brand for £12m a year, rising to £15m later.