Virgin Money bought by CYBG for £1.7bn
Image copyright Newscast The owner of Clydesdale Bank and Yorkshire Bank, CYBG, has agreed to buy Virgin Money for £1.7bn.
CYBG said the new firm would be a leading force in banking, "disrupting the status quo and championing customer service excellence".
It will be the UK's sixth largest bank, with six million customers.
CYBG said it had entered into an agreement with Sir Richard Branson's Virgin Group to keep the Virgin Money brand.
Virgin Group is Virgin Money's biggest shareholder with a 34.8% stake in the business.
Under the terms of the deal, Virgin Money shareholders will get 1.2125 new CYBG shares for every share they hold.
Virgin Money, which was founded in 1995, expanded its business in 2011 when it bought the remnants of Northern Rock for about £747m.
Key figures
CYBG
- 2.8 million customers
- 169 branches
- £2.6bn market capitalisation
Virgin Money
- 3.3 million customers
- 74 branches
- £1.5bn market capitalisation
'Competitor of scale'
CYBG said the takeover would "bring together the complementary strengths of two successful challenger banks to create the UK's first true national competitor to the large incumbent banks".
Its chief executive, David Duffy, told the BBC's Today programme: "We're going to become a competitor of scale."
He added that "technology and agility" were the factors that would decide the future of banking.
"I think we have sufficient scale - the brands, the product and the technology," he said.
"We can be agile enough to deliver a much better deal for the customer."
Mr Duffy will retain his current position in the combined group, as will CYBG chairman Jim Pettigrew.
Virgin Money chief executive Jayne-Anne Gadhia has agreed in principle to stay on as a consultant for a limited time after the deal goes through.
