Britain's Clydesdale Yorkshire Banking Group today said it had bought Richard Branson's Virgin Money for 1.7 billion pounds, as it seeks to challenge the dominance of top lenders.
The all-shares deal, worth the equivalent of USD 2.3 billion or 1.9 billion euros, will see the combined group adopt the Virgin Money brand over the next three years, the pair said in a statement that indicated about 1,500 job losses.
The new group, offering retail services like home loans, savings accounts and credit cards, brings together two so-called "challenger" or smaller banks with a combined customer base of 6.1 million people. It will be better placed to compete with established British bank names like Barclays, HSBC, Royal Bank of Scotland, Lloyds Banking Group and Santander.
"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," said CYBG chief executive David Duffy.
"By combining two of the UK's leading challenger banks, we will create a national, full-service bank with the capabilities needed to compete effectively with the large incumbent banks," he said further.
CYBG investors will hold a majority 62 per cent stake with Virgin Money shareholders the rest. The pair warned that it could axe as many as 1,500 jobs, or 16 per cent of its combined workforce, following completion of the deal. Virgin Money's biggest shareholder is Richard Branson's Virgin Group with a holding of almost 35 per cent. The bank is perhaps best known for its purchase of failed UK lender Northern Rock -- which collapsed during the global financial crisis.
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