BREAKING NEWS

BREAKING NEWS

CYBG and Virgin Money agree £1.7 billion deal to create Britain's sixth biggest bank

Now Reading:

CYBG and Virgin Money agree £1.7 billion deal to create Britain's sixth biggest bank

CYBG and Virgin Money agree £1.7 billion deal to create Britain's sixth biggest bank
Text size Aa Aa

By Emma Rumney

LONDON (Reuters) - Mid-sized bank CYBG has agreed a 1.7 billion pound all-share deal to acquire Virgin Money, which it said will create Britain's sixth-largest bank and a new challenger to the country's top four lenders.

The deal, on the same terms as CYBG's sweetened bid in June, will see Virgin Money shareholders receive 1.2125 CYBG shares per Virgin Money share and own approximately 38 percent of the combined group.

It will create Britain's sixth-largest bank by assets, around twice the size of its largest rival and with the firepower of the Virgin brand, which the combined group will pay a royalty to keep. Richard Branson owns around 35 percent of Virgin Money.

CYBG CEO David Duffy, who will lead the combined group with Virgin Money CEO Jayne-Anne Ghadia acting as a senior advisor for an unspecified period of time, said the deal will create a lender with the capabilities needed to take on large incumbents.

"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," he said in a statement.

Still, its size will pale in comparison to the likes of Lloyds Banking Group and the Royal Bank of Scotland, meaning the new bank will have a steep hill to climb to take on Britain's big four, which dominate the sector.

CYBG will pay a fixed royalty to keep the Virgin Money brand, which starts at 12 million pounds in the first year and increases to 15 million pounds in the fourth year.

An additional royalty will kick in the fifth year, or the fourth year if CYBG's turnover reaches a threshold amount.

Like Duffy, CYBG's chairman, Jim Pettigrew and its finance director Ian Smith will all retain their roles in the combined group.

(Reporting by Emma Rumney, editing by Silvia Aloisi and Louise Heavens)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.