By Scott Wright
SHARES in the owner of the former Clydesdale Bank plunged more than nine per cent after it unveiled plans to slash costs as part of its digital banking drive.
Glasgow-headquartered Virgin Money declared yesterday that it was targeting gross savings of around £175 million between now and 2024 by accelerating its digital first strategy.
However, it said it would book restructuring charges of £275m to achieve the savings.
The enhanced digital strategy would appear to cast further doubt on the future of the bank’s branch network. In late September, the bank said it would cut a further 12 branches in Scotland, reducing its total to 33, as it cited the impact of the pandemic on banking trends in September. Unite Scotland branded the cuts, which are expected to result in 70 redundancies, as “shameful”.
The bank reiterated yesterday that the pandemic had accelerated the pace of digital change. It said that it would invest to drive productivity “via greater automation of customer journeys”. Around 50 per cent of the £175m it is seeking to save will be reinvested or used to offset the impact of inflation.
But the bank said it will be investing around £275m to deliver the savings, booked as restructuring charges between now and 2024.
The plans came in a trading statement in which Virgin Money said it expects return to profit in the year ended September 30. The bank, which plans to resume dividends at 1p per share, expects to report a statutory profit before tax of £417m. Shares closed down 17.85p at 117.85p.
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