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Clydesdale tipped to start buying spree after investors back ?1.7bn Virgin Money takeover

Shareholders have backed Clydesdale bank’s ?1.7bn all-share takeover of Virgin Money, and top investors believe it could start a buying spree.
The combination of the two FTSE 250 lenders will create a bank with six million customers and ?83bn worth of assets. The deal is expected to close by the end of the year.
A top 10 investor in Virgin Money told The Telegraph he expected the tie-up to be the first of many.
“The combined group will have quite a lot of surplus capital,” he said. “CYBG has a chance to create a challenger bank that actually has some heft and can compete effectively against the big banks.
“Another takeover is unlikely in the next few months, but early to mid next year they could be in a position to do another deal.”
Investors in both firms voted in favour of the deal today, with more than 99pc supporting it. However, some Virgin Money shareholders rebelled against a resolution giving the bank's chief executive, Jayne-Anne Gadhia, a ?619,000 redundancy payout, on top of a termination payment of ?1.1m.
Clydesdale tipped to start buying spree after investors back ?1.7bn Virgin Money takeover

Some shareholders rebelled against a more generous severance payout for Virgin Money chief executive Jayne-Anne Gadhia

Credit:
Ian Rutherford
She will also receive a bonus owed to her of ?1m, taking her golden goodbye to more than ?2.6m. The vote passed, but with 13pc voting against.
Ms Gadhia will not join the board of the combined bank, but will work with it as a consultant for up to 18 months. Clydesdale chief executive David Duffy will lead the enlarged firm.
City sources said TSB could be a tempting next target for Clydesdale and Yorkshire Banking Group (CYBG) - despite its high profile IT woes - as well as the smaller lender OneSavings Bank.
City analysts have previously told The Telegraph TSB’s IT meltdown made it more likely Spanish parent Sabadell would sell the UK bank.
“If a third party came along and looked at the business there’s a much higher probability that they would sell now,” John Cronin at Goodbody said.
The top 10 investor, speaking ahead of today’s vote, said the integration of Virgin Money should be “relatively straightforward” as it has few current account customers to transfer, potentially paving the way for a buying spree.
Clydesdale tipped to start buying spree after investors back ?1.7bn Virgin Money takeover

Clydesdale chief executive David Duffy will helm the enlarged bank

Credit:
 Heathcliff O'Malley
The combined group should have excess capital to play with. CYBG has said it wants its capital buffer to be at least 12pc after the deal.
Virgin Money sits comfortably above this at 16pc, with CYBG just below at 11.3pc, although it is expecting a boost from an upcoming reappraisal of its mortgage book by regulators.
CYBG declined to comment on future acquisition plans.
The combined group will rebrand as Virgin Money over three years after striking a ?15m a year agreement with Virgin founder Richard Branson.
Ms Gadhia said the combination would “create the UK's first true national competitor in UK banking, improving competition and choice for all UK consumers, while enabling the Virgin Money franchise to continue to flourish".
TSB is currently without a chief executive after Paul Pester stepped down last week following a torrid five months.
The bank’s botched system upgrade in April led to around a million customers losing access to vital online services for days and more than 1,300 people losing money through fraud.
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