The owner of the Clydesdale and Yorkshire bank brands has been granted more time to discuss a revised offer for a merger with Virgin Money.
Sky News reported on Sunday how CYBG had tabled a higher bid, valuing Virgin at around £1.7bn, amid continuing discussions on creating a new £4bn national bank, including use of the Virgin name.
The pair said on Monday that the Takeover Panel had granted a 14-day extension to the ‘put up or shut up’ deadline to allow further talks – now set to expire on 18 June.
The statement said: “Under the terms of the revised proposal, CYBG would acquire the entire issued and to be issued ordinary share capital of Virgin Money on the basis of an exchange ratio of 1.2125 new CYBG shares for each Virgin Money share, which implies that Virgin Money shareholders would own approximately 38% of the combined group.”
It also pointed to the potential for “significant” cost savings through any merger – in areas including IT infrastructure and infrastructure investment.
There was no word on the likelihood of job losses.
The statement added: “The boards of CYBG and Virgin Money believe that the proposed combination would create the UK’s first true national banking competitor, offering both personal and SME customers an enhanced alternative to the large incumbent banks.”
A merger to a single group would form a business with six million personal and SME banking customers and a £70bn balance sheet – far ahead of any of Britain’s other challenger banks.
CYBG initially made an offer of 1.1297 of its shares for each Virgin Money share.
One of the issues which remains unresolved relates to the use of the Virgin name in a combined group.
CYBG has said it would “ensure that the Virgin Money brand would play a significant role” if a takeover goes ahead, with one insider telling Sky News the parent company was “highly likely” to use the brand created by Sir Richard Branson.
Among the options being negotiated between the two boards is for the Virgin Money name to replace a substantial proportion of the retail banking products currently offered under the Clydesdale and Yorkshire brands, the insider added.
Sir Richard’s Virgin Group holds around a 30% stake in Virgin Money, which bulked up after the financial crisis by buying the retail operations of Northern Rock in a £750m deal.
Virgin Money’s shares opened more than 3% lower on Monday morning.while CYBG’s stock was up by 2.8%.