1,500 jobs at risk in Virgin-CYBG merger
AS MANY as 1,500 jobs could go as a result of the merger of Virgin Money and Clydesdale and Yorkshire Banking Group (CYBG) as top investors demand that the axe is swung to win their support for the £4bn tie-up.
CYBG won backing in principle from the Virgin Money board for an improved all-share proposal last week. It has until June 18 to make a firm offer. Sir Richard Branson is effectively “kingmaker” in the deal, with his Virgin Group locked in talks with CYBG over the cost and scope of a licence agreement for use of the Virgin name.
But support from other Virgin Money investors is far from assured. A top-10 shareholder in the bank told The
Sunday Telegraph that the duo needed to present credible plans “to cut at least 15pc of the combined cost base”.
“Above that threshold, the benefits of the deal would be significant enough,” the investor said. Applied to the banks’ combined 10,000 head- count, this would imply 1,500 redundancies. It is thought that savings may also come from IT and operational efficiencies.
Virgin Money’s response to CYBG’S revised approach raised eyebrows. While it gets a greater share of the combined company – 38pc, up from 36pc – the monetary value fell due to an intervening dip in CYBG’S share price.
CYBG and Virgin Money declined to comment.