Clydesdale and Yorkshire Banks buy Virgin Money for £1.7billion – here’s how it affects customers
CLYDESDALE and Yorkshire Banks owner has agreed to buy Virgin Money in a deal worth £1.7billion.
The merger between CYBG and Virgin Money will create Britain's sixth biggest bank, but puts 1,500 jobs at risk.
Virgin Money was created by Richard Branson back in 2011 when it bought the remaining shares of Northern Rock after it went bust in 2008.
It's not yet clear how the merger will affect the 2.8million CYBG customers and 3.3million Virgin Money customers, but they do plan to operate under the Virgin brand within the next two to three years.
Branson will be paid £15million a year for the bank to trade under the name.
In a bid to calm customers who may be worried about the merger following the disastrous TSB migration IT upgrade, CYBG promised that there will be no "big bang" move for Virgin Money customers to transfer to its platform.
Instead, it will be phased over the next three years.
But the announcement warned that it could lead to 1,500 job losses across both companies.
The banks will have a combined total of 233 branches - 169 CYBG and 74 Virgin Money stores.
Virgin Money CEO Jayne-Anne Gadhia said: "We have obtained assurances from CYBG regarding our employees (including a commitment to leverage the best talent from both CYBG and Virgin Money) and our Gosforth headquarters.
"The combined group will remain a committed voice behind the Women in Finance Charter as well as working to reduce the gender pay gap.
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";This is a compelling deal for our shareholders, that accelerates value delivery and represents the beginning of the next chapter of the Virgin Money story."
There has been speculation that a deal will go ahead since last month when talks began, causing share prices to jump from 270p to 312p in week.
Four years after the financial crisis, Branson bought the remains of Northern Rock for half the amount the UK taxpayer had pumped into rescuing it years earlier.
The then Chancellor George Osborne agreed to the sale of the "good" parts of the bank as it was "value for money".
The "bad" side of Northern Rock, including the infamous 125 per cent mortgages, was still owned by the public, but a portion of them have been sold on to other firms.
This has partly led to the some 150,000 mortgage prisoners who are trapped paying sky-high interest on variable rate mortgages with no hope of switching.
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