Clydesdale and Yorkshire Banking Group (CYBG) has made a takeover offer for rival Virgin Money.
The all-share “preliminary approach”, which values Virgin at about £1.6bn, would create a company with six million personal and business customers and create a leading challenger to Britain’s biggest lenders, CYBG said.
It will add to pressure on competitor TSB – which has five million customers – after it was hit by a botched IT upgrade that left many without online banking.
Shares in Virgin Money climbed 8% in early trading, while CYBG was up 1%.
CYBG said in a statement confirming its offer: “CYBG believes the combination would create the UK’s leading challenger bank offering both personal and SME customers a genuine alternative to the large incumbent banks.
“The combination would provide a powerful full-service banking offer, including leading digital and mobile banking services.”
The group said it represented an “attractive up-front premium” for Virgin Money shareholders, who would own 36.5% of the enlarged lender.
It added that it recognised the “strength and appeal” of the Virgin Money brand and that this would play a “significant role” in the combined business subject to the agreement of Richard Branson’s Virgin Group, currently a major shareholder.
CYBG, which made its stock market debut in 2016 after being spun off by National Australia Bank, said there was no certainty that a formal offer would be made.
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Virgin Money, which launched in 1995, expanded with the takeover of Northern Rock in 2011.
It said it was “in the process of reviewing” the proposal from CYBG.
Source: Sky