CYBG makes preliminary approach regarding combination with Virgin Money

The City of London skyline Photo: Jonathan Brady/PA Wire

UK challenger Bank CYBG, the owner of the Clydesdale Bank, Yorkshire Bank and B brands, has announced that it has made a preliminary approach regarding a potential all share combination of CYBG and Virgin Money.

In a statement, CYBG said: “CYBG believes the combination would create the UK’s leading challenger bank with a powerful full-service banking offer for six million personal and business customers.”

CYBG, which made its London market debut in 2016 after it was spun off by National Australia Bank, said Virgin Money would own about 36.5 percent of the combined company. Virgin Money shareholders would receive 1.13 new CYBG shares for each Virgin Money share.

Virgin Money, founded and partly owned by entrepreneur Richard Branson, said its board was reviewing the proposal.

CYBG shares fell last month after the lender said it had increased provisions for repaying customers missold payment protection insurance.

Last week, Virgin Money reported a strong credit performance and better-than-expected deposit growth from savers in the first quarter.