A report in The Sunday Times stated that a firm all-share proposal from CYBG was being finalised this weekend, ahead of a 5pm deadline on June 18.
A CYBG spokesman also declined to comment on the report.
Earlier this month, CYBG raised its offer to buy Virgin Money in a deal that would create Britain’s sixth biggest bank and become a major challenger to the big five banks.
The UK banking sector is dominated by HSBC, Barclays, Lloyds Banking Group, Royal Bank of Scotland and Spanish-owned Santander UK .
CYBG is hoping the takeover will create the UK’s leading challenger bank, offering customers a genuine alternative to the large incumbent banks. Many analysts have been concerned about the lack of competition in the UK banking sector.
Earlier this month, a joint announcement by the two firms confirmed they were in talks over the proposed all-share deal. CYBG has until June 18 to make an offer.
If the deal goes ahead, CYBG and Virgin Money, which was founded almost 25 years ago by British entrepreneur Sir Richard Branson, would combine to create Britain’s sixth largest bank by assets, albeit one still dwarfed by the big five banks.
The revised offer valued Virgin Money at around £ 1.6 bn.
CYBG said it had improved its all-share offer for Virgin Money by raising the exchange ratio by seven per cent, an increase which analysts said should be enough to get the deal over the line.
Under the terms of CYBG’s revised proposal, Virgin Money shareholders would own about 38 per cent of the combined group compared with the original 36.5 per cent offer.
While the combined CYBG and Virgin brand would have assets of around £84bn, that pales in comparison to rivals like RBS and Lloyds with assets of £739bn and £805bn respectively.
CYBG/Virgin would have around 250 branches, compared with 893 for RBS and 1,795 for Lloyds.
CYBG, which owns Yorkshire Bank, Clydesdale Bank and the B brands, said the proposed deal would create the UK’s “first true national banking competitor”, offering a sound alternative for customers.