The owner of the Clydesdale Bank, Yorkshire Bank and B brands said the terms of the agreement will see each Virgin Money share exchanged for 1.2125 shares in the new combined group, which will gradually be re-branded under the Virgin Money banner.
The deal values each Virgin Money share at around 371p and the entire group at £1.7 billion. It is also expected to lead to around 1,500 job losses.
CYBG’s David Duffy will stay on as chief executive, leaving Virgin Money boss Jayne-Anne Gadhia to serve in a consultancy role as his senior adviser.
The group - which will have its headquarters in Glasgow - will see CYBG’s Jim Pettigrew continue on as chairman alongside finance chief Ian Smith.
The firms said they recognise “that there will be a loss of jobs” as a result of the takeover. The bulk of the cuts will affect senior management positions, as CYBG has said there is “very little in overlap” in customer-facing roles
“As a result of the significant operational overlap between CYBG and Virgin Money, the combined group will be able to reduce the duplication of roles, leading to a decrease in the total number of FTEs (full-time equivalent employees).
“It is currently expected that the total number of FTEs of the combined group, being approximately 9,500 FTEs, will reduce by approximately 16 per cent, some of which will take place via natural attrition.”
Mr Duffy told The Yorkshire Post that job losses will probably come from head office and senior management staff.
He stressed that no decision has been made yet where precisely these cuts will come from.
He added: “We have to look at different skill sets and we have not engaged in that level of detail.”
When asked whether the Yorkshire Bank name will disappear from the high street in three years’ time, Mr Duffy said: “I have no answer yet.”
He said he couldn’t rule out that the branches will all become Virgin Money branches.
He said he plans to speak to SME (small-and-medium-sized enterprise) customers and see how they respond to a possible change to the Virgin Money brand. Mr Duffy said he was aiming to deliver the “next generation” banking model.
Rob MacGregor, a national officer at Unite, said: “The purchase of Virgin Monday by Clydesdale and Yorkshire Bank will change the face of banking in many high streets across the country.
“It is vital that the skilled and experienced workforce are given assurances that branches and contact centres will not be closed leaving customers without their much valued access to local banking.”
Mr MacGregor is now calling for an urgent meeting with Mr Duffy in order to secure assurances for staff.
The prospect of bank branch closures was played down by CYBG’s finance chief Mr Smith, who said it was “early days” for any estimates.
However, he said it was “pretty clear” that Virgin Money’s branch network “fills up some spaces that we don’t have at the moment”.
Sir Richard Branson, meanwhile, is expected to rake in royalties for CYBG’s use of the Virgin brand - at a minimum fee of £15 million annually after the first four years that the combined group is operating.
CYBG said it will work “collaboratively” with Virgin Enterprises in regards to the rebranding of CYBG’s businesses and the use of the Virgin Money brand.
David Duffy, the chief executive of CYBG, said: “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.
“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.”