CYBG has formally completed its £1.7 billion takeover of Virgin Money, marking one of the first major banking deals since the financial crisis.
It comes after the two banks – which together hold around £84 billion in assets – received final approval in a court hearing on Friday.
Virgin Money’s London-listed shares have now been cancelled, with the all-stock deal resulting in another 540 million new CYBG shares entering the market.
A raft of resignations also followed the deal’s completion.
It includes Virgin Money chairwoman Irene Dorner and chief executive Jayne-Anne Gadhia, though Ms Gadhia has agreed to work as a senior adviser to CYBG boss David Duffy over the next 18 months.
He will be supported by CYBG finance chief Ian Smith, while Virgin Money’s chief financial officer Peter Bole will become group integration director to help with the changes across both businesses.
Today marks an historic milestone for CYBG and Virgin Money, creating the first true national competitor to the status quo in UK banking with a clear ambition to provide customers with the best service in the UK.CYBG chief executive David Duffy
Hugh Chater, managing director of the core bank of Virgin Money, meanwhile, will be responsible for the day-to-day operation of the Virgin Money business.
CYBG chief executive David Duffy said the deal will help it compete with larger rivals, which include the likes of Barclays, Lloyds and RBS.
He said: “Today marks an historic milestone for CYBG and Virgin Money, creating the first true national competitor to the status quo in UK banking with a clear ambition to provide customers with the best service in the UK.
“Bringing the two banks together creates the UK’s sixth-largest bank combining strong product, service and technology capabilities alongside an iconic brand with well-known consumer champion credentials.
“We are focused on delivering an excellent customer experience as we bring the two businesses together. This will be achieved through a clear, low-complexity, phased integration and re-branding plan over the next three years.
“This is a unique combination that will enable us to compete with the large incumbent banks.”
But the deal has struck a bad chord with some consumers worried about CYBG’s transition to the Virgin Money brand.
CYBG stressed there were no plans for an “immediate” changeover, but that the retail sides of its brands including Yorkshire and Clydesdale banks would transition to Virgin Money branding over the next three years.
It is exploring a similar move for users of its small and medium-sized enterprise (SME) banking services.
“The Virgin Money brand has potential in the SME market, and testing with existing Clydesdale and Yorkshire Bank customers is under way to evaluate the Virgin Money brand affinity with SME customers and the appropriate timescale for any SME rebranding exercise,” CYBG said.
The combined group will use CYBG’s existing platform, though only around 30% of the group’s accounts are expected to have to migrate across.
“There will be no ‘big bang’ customer migration,” CYBG pledged.
The reassurance comes as peer TSB continues to grapple with the aftermath of an IT meltdown sparked by its own move to a new banking platform built by Spanish owner Sabadell.
CYBG and Virgin Money have also courted controversy over plans to shed more than 1,500 jobs.
However, CYBG has pledged to maintain a “substantial base” at Virgin Money’s Gosforth headquarters for at least three years.
The combined group is expected to result in annual cost savings of around £120 million by the end of September 2021.
With more than six million customers, the bank will also hold £70 billion in customer loans and around £58 billion in mortgages.
Virgin Group chief executive Josh Bayliss said: “The Virgin Group started Virgin Money 23 years ago to shake up the UK’s banking sector.
“By putting customers and employees first, and working to make a real difference to people’s lives, we quickly became one of the most admired financial services businesses in the UK.
“Today’s announcement marks the beginning of the next chapter in the Virgin Money story.
“The combination of Virgin Money and CYBG will offer unrivalled service, an innovative digital platform and outstanding products, bringing huge benefits for customers, employees and communities alike.
“Together we have the size, scale and financial firepower to change banking for good.”