CYBG appears to be moving closer to a takeover of Virgin Money which would create a banking group that may have a better chance of competing against the high street giants than the firms do separately.
The Clydesdale Bank owner appears to have won the support of Virgin Money’s board for a tie up both sides reckon has strategic logic behind it after sweetening the proposed terms.
With shares in Virgin Money trading at within 5 per cent of the valuation attached to them by the proposed bid the City seems to regard the all-share deal as likely to go through.
Analysts think the lack of a cash element could limit enthusiasm for the deal among Virgin Money shareholders if CYBG decides by the 18 June deadline to make a formal offer.
Some investors may feel it could take years for the operational benefits the deal is expected to generate to come through.Integrating systems used for three brands including Yorkshire Bank, would not be easy
CYBG has left itself leeway to include some cash in the mix if it decides to make a formal offer.
Employees of CYBG and Virgin Money may regard the prospect of them combining with concern.
Noting they were talking about creating a new national force in banking, the groups flagged the potential to make big cost savings through measures such as removing duplication. However, there is not much overlap between the branch networks.
Ministers may be wary about consolidation among challenger banks, which could mean the ranks of competitors to the big guns are thinned.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here