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CYBG to buy Branson's Virgin Money for £1.7b


CYBG Plc has agreed to buy Virgin Money Holdings UK Plc for about £1.7 billion in an all-stock transaction, creating a bank with about six million customers to challenge Britain's largest lenders.

The purchase of the Richard Branson-backed bank gives consumer and business lender CYBG greater scale, potential cost savings and access to the firm's presence on the high street.

The deal adds to a number of transactions among a handful of smaller banks in the UK as they seek to raise funds and steal business from the nation's top lenders. The combined company will have around £80 billion of assets, according to a statement on Monday.

"Combining these two businesses has much strategic logic, in our view, with CYBG bringing strengths in SME banking and current accounts, complementing Virgin Money's well-recognised brand and strength in credit cards," Gary Greenwood, an analyst at Shore Capital, said in a note to investors.

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Virgin Money shareholders would receive 1.2125 new CYBG shares under the offer. Owners of the Branson company will own about 38 per cent of the combined group.

The tie-up is expected to generate £120 million of annual pre-tax cost synergies by the end of the financial year ending September 2021, the statement said. BLOOMBERG

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