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1,500 Job Losses In The CYBG Acquisition Of Virgin Money

1,500 Job Losses In The CYBG Acquisition Of Virgin Money
The acquisition of Virgin Money by the owner of Clydesdale and Yorkshire banks will cost the bank over 1,500 jobs. It has been reported that the £1.7bn takeover of will result in axing of primarily middle and senior management positions.
The deal will create the sixth-largest bank in the UK and the combination will have access to 6 million personal and small business clients and a total lending of over £70 billion.
Reduction of overlap between their operations would enable the two firms to generate cost savings of £120 million annually by 2021, said the banks. That reduction in over lap will require reducing the workforce by 16% of the combined 9,500-strong employee strength which is hoped to be achieved through attrition by CYBG which means that there would be no replacement of people who leave the organization. While not quantifying the number of branches of the combined 250 branches of the banks would also be closed, the banks conceded that there was some overlap in that area as well.
Virgin Money’s head office in Gosforth, Newcastle is however being planned to be retained for at least three years. The CYBG boss David Duffy would head the combined company while the chief executive of Virgin Money – who has headed the firm for over 10 years is slated to become a senior adviser to Duffy.
Since the news of the job losses had bene conveyed by the media, therefore for the employees spread across the country, it would be a shock, said the Unite union and added that an urgent meeting with Duffy is being sought by it.
Duffy said: “It’s a pretty historic day for CYBG and Virgin Money.” the strength of Virgin Money in the sectors of mortgages, credit cards and investments would be combined with the strong presence of CYBG in small and mid-sized business to offer a full scale of products and services by the combined entity, he added.
Sir Richard Branson had founded Virgin Money in 1995. Branson owns 35% of the stake in the bank which will get reduced ot5 13.1% after the completion of the deal. It was seven years ago that the controversial take over Northern Rock for £747 million was done by the bank after the acquired firm was bailed out by public money.
Before testing the Virgin Money brand for small and medium-sized business customer, CYBG will first use the brand for personal banking. The rebranding will cost £60m. The Virgin Money brand would be leased at £12 million a year initially by CYBG. That figure would get increased to £15 million in the fourth year. The CYBG will also pay yearly royalties equivalent to 1% of revenues from the fifth year which will all go to Branson.

Christopher J. Mitchell

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