19 Oct 2018
CYBG has completed the acquisition of Virgin Money, creating the UK’s sixth biggest bank and the first national banking competitor to the status quo. The recommended all-share offer was first announced on 18 June 2018.
The combination of CYBG’s Clydesdale and Yorkshire Banks with Virgin Money delivers what is needed to disrupt the status quo in banking:
Commenting on completing the Virgin Money acquisition, CYBG chief executive David Duffy, said:
“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.
"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.
“We are focused on delivering an excellent customer experience as we bring the two businesses together. This will be achieved through a clear, low-complexity, phased integration and re-branding plan over the next three years.
"This is a unique combination that will enable us to compete with the large incumbent banks.”
Josh Bayliss, Virgin Group CEO, said:
“The Virgin Group started Virgin Money 23 years ago to shake up the UK’s banking sector. By putting customers and employees first, and working to make a real difference to people’s lives, we quickly became one of the most admired financial services businesses in the UK. Today’s announcement marks the beginning of the next chapter in the Virgin Money story.
“The combination of Virgin Money and CYBG will offer unrivalled service, an innovative digital platform and outstanding products, bringing huge benefits for customers, employees and communities alike. Together we have the size, scale and financial firepower to change banking for good.”
Creation of a true national competitor to the status quo
The combined group has over six million customers, c.£84 billion of assets and c.£70 billion of customer loans, including c.£58bn of mortgages – double the size of any other challenger bank.
The new group will offer a complementary mix of product expertise, taking CYBG’s strengths in personal and business current accounts and its successful digital platform, the two firm’s shared strengths in mortgages and Virgin Money’s expertise in credit cards and savings.
The combination of CYBG with Virgin Money also offers a strong financial case, built around an accelerated and sustainable growth plan. There is significant potential value creation as the enlarged Bank is expected to generate £120 million of annual pre-tax cost synergies by the end of the financial year September 2021.
The retail brand for the combined group will transition to the Virgin Money brand over the next three years.
Given its entrepreneurial spirit, CYBG also believes the Virgin Money brand has potential in the SME market and testing with existing Clydesdale and Yorkshire Bank customers is underway to evaluate the Virgin Money brand affinity with SME customers and the appropriate timescale for any SME rebranding exercise.
There will be no immediate change for the CYBG brands or customers of both banks. Instead there will be a phased, low-complexity migration and re-branding plan over the next three years. The combined group will use CYBG’s existing iB technology platform, with only approximately 30% of all the combined group’s accounts expected to be part of a transfer or migration process. There will be no ‘big bang’ customer migration.
The combined group remains committed to maintaining a substantial base in Gosforth for at least three years and will continue to support the Virgin Money Foundation honouring its commitments through ongoing financial support. The group will also continue to champion the Women in Finance Charter, as well as working to reduce the gender pay gap.
Leadership Team confirmed
CYBG is also pleased to confirm the new Leadership Team for the combined group. As previously communicated, David Duffy will assume the role of Chief Executive Officer and Ian Smith, current CYBG Chief Financial Officer will retain the same position.
Jayne-Anne Gadhia, former Chief Executive of Virgin Money will be stepping down as CEO, but has agreed in principle to support the group as a senior adviser to David Duffy for a period of up to 18 months.
The remaining CYBG Leadership Team members will continue in their current roles and will be joined by Peter Bole and Hugh Chater from the Virgin Money Executive Team.
Peter Bole, formerly CFO of Virgin Money will assume the role of Group Integration Director with responsibility for leading the delivery of the integration programme across both businesses.
Hugh Chater, Managing Director, Core Bank of Virgin Money, will join the CYBG leadership team and be responsible for overseeing the day-to-day operation of the Virgin Money business in support of David Duffy as CEO.
David Duffy continued: “I am delighted to confirm the Leadership Team for the combined group. CYBG and Virgin Money have similar customer and community focused values, and our team has a shared vision for how the new business will be a leading force in banking and deliver the best customer service in the UK.
"I am especially pleased Peter and Hugh will be joining our team. Both bring fantastic experience and expertise which, along with the wider Leadership Team, will be invaluable in helping us bring together the complementary strengths of both businesses and deliver the UK’s first true national competitor in banking.”