Norwich jobs ‘could be at risk’ in Virgin Money deal with Yorkshire Bank owner
Jobs at Virgin Money, including in Norwich, could be put at risk if a takeover bid by CYBG goes ahead, it has been claimed.
Shares in the financial arm of Sir Richard Branson’s empire have surged more than 15% over the past week on news that CYBG, owner of the Clydesdale Bank, Yorkshire Bank and B brands, tabled a tentative bid valuing the challenger bank at £1.6bn.
Founded in 1995 by Branson and Norwich Union as Virgin Direct, the company now employs 200 people in Norwich at its Virgin Money store and lounge in Castle Street and at an office on Broadland Business Park.
Both lenders have confirmed that CYBG made a preliminary and conditional offer on Monday.
But The Times today reported financial analysts’ estimations that as many as 1,000 jobs – including that of Virgin Money chief executive Jayne-Anne Gadhia – could be lost if the takeover goes ahead.
Online banking could be one area in line for a cull, as both companies are investing heavily in their digital platforms, one analyst told The Times.
A spokesman for Virgin Money said it would not comment on industry speculation.
CYBG has offered to give 1.1297 shares for each Virgin Money share, effectively valuing each stock at 359p each and giving the lender a market capitalisation of around £1.6bn.
The Clydesdale Bank owner said the combination would create the “UK’s leading challenger bank offering both personal and SME customers a genuine alternative to the large incumbent banks”.
“With this further strengthened customer franchise and national reach, CYBG believes the combination would deliver increased value for shareholders and wider benefits to other stakeholders,” CYBG added.
CYBG assured that the Virgin Money brand would “play a significant role in the combined group,” with its takeover target’s Virgin Money shareholders set to own around 36.5% of the new business.
The news sent shares in Virgin Money Holdings up as much as 7.6% in morning trading on Wednesday, while CYBG shares rose around 0.8%.
The deal could mean a major payout for founder Sir Richard Branson, whose Virgin Group holds a controlling stake in the lender.
A formal offer must be tabled no later than 5pm on June 4.
Gary Greenwood, an analyst at Shore Capital Markets, said the combination would bring together CYBG’s SME banking capabilities and branch network with Virgin Money’s “better brand” and strong intermediary mortgage franchise.
However, he warned that there are likely to be hurdles to any tie-up, including the integration of their IT systems.
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