THE Clydesdale Bank name will gradually be phased out following owner CYBG’s £1.7 billion acquisition of Virgin Money, one of its most senior executives has said.

The revelation came as Glasgow-based CYBG, owner of Clydesdale and Yorkshire Banks, confirmed that the board of Virgin had recommended its renewed takeover approach for the challenger bank. It will ultimately spell the end for a brand name which has been a fixture in Scottish banking since Clydesdale Bank was established in 1838.

Virgin shareholders will hold 38 per cent of CYBG following the merger, which will lead to the loss of around 1,500 jobs. The cuts will come as the bank looks to make annual savings of £120 million by the end of the third year after the deal completes, amid action to remove the duplication of back office functions and rationalise senior management roles.

CYBG said the deal would create a force capable of taking on the UK’s major high street banks, with the combined organisation holding six million customers, £84bn of combined assets and £70bn of customer lending. It highlighted the combination of its current accounts, savings products, mortgages, and SME services with Virgin’s credit card business and brand strength.

The deal will see CYBG pay Sir Richard Branson’s Virgin Enterprises an initial £12m a year for the right to use the Virgin Money brand, rising to £15m after four years. And that will ultimately result in the Virgin brand usurping the Clydesdale name on Scottish high streets.

Debbie Crosbie, group chief operating officer, said the Clydesdale brand will gradually be replaced by Virgin Money “over time in a sympathetic fashion” for retail customers. She said: “For a reasonably significant period, customers will see no change. We won’t even start doing this for probably 12 to 18 months.

“Then what we are going to do is make sure that customers like the brand and it works sympathetically with the heritage we have got in Clydesdale and of course in Yorkshire Bank.

“We believe that it is the right thing to do to introduce this to our retail customer base.”

Ms Crosbie added that tests will be carried out to gauge how the proposed rebranding will “land” with the bank’s SME customers. “But over time the ambition, as long as we get the right feedback from our customers, is to rebrand Clydesdale, Yorkshire and B to the Virgin Money brand,” she said.

While emphasising the affection for the Clydesdale name, Ms Crosbie said the bank is being driven by the demands of its customers. She said the deal means customers will be able to access a full product range, from the Virgin Money credit card portfolio to CYBG’s current accounts and SME services.

And she highlighted the strength of the Virgin Money brand, which is recognised by 99% of consumers, as a key attraction. “People see it as entrepreneurial, they see it as new and interesting, but equally… the Virgin brand brings together a whole set of services and experiences that we think we can introduce customers to that they will really like,” Ms Crosbie said.

“We’re optimistic about the future, but we are not complacent about the heritage, and we will be doing this very thoughtfully with our staff and our customers fully consulted on the way through.”

CYBG said the deal effectively doubles the group in size, with boss David Duffy declaring it creates the “first true competitor to the status quo in UK banking, offering a genuine alternative for consumers and small businesses.”

The group it expects to make savings of £120 million a year before tax across the combined group by the end of the third year following the acquisition, with around £35m a year coming from the reduction of senior management roles. About £35m per year will be saved annually by rationalising central function locations, including efficiencies in IT and procurement, while moves to optimise the combined group’s branch network is expected to produce annual savings of about £15m.

Ms Crosbie said the bank was “absolutely committed to protecting customer-facing roles” in branches and call centres. And she signalled her hope that much of the cuts would be covered by “natural attrition” as it takes place over a three-year period. No guidance was given on how many roles will go in Scotland.

CYBG boss David Duffy will continue to lead the bank, but Virgin Money chief executive Jayne-Anne Ghadia will step down. Ms Ghadia, who has led Virgin Money for more than a decade, will leave after staying on as a senior adviser to Mr Duffy for an unspecified time.

Shares in Virgin fell 7.7p or 2.2% to 347.3p, while CYBG shares dipped 2.2p at 304p.