CYBG, which owns Clydesdale Bank, Yorkshire Bank and digital brand B, has completed a deal to buy Virgin Money for £1.7bn.
The move will mean all CYBG’s retail customers and branches will be moved to Virgin Money’s brand over the next three years, creating the UK’s sixth largest bank.
Which? takes a look at what the merger means for products, deposit protection and the branch network of the brands involved.
What is the CYBG and Virgin Money merger?
CYBG announced its takeover bid of Virgin Money in June earlier this year and has now gained the approval of shareholders, as well as regulators the Financial Conduct Authority and the Competition and Markets Authority.
The integration of the CYBG brand into the Virgin Money brand will take place over the next three years.
CYBG has around 2.7 million customers and Virgin Money has 3.3 million, so the move will mean the combined group will have six million customers in total – making it the UK’s sixth largest bank.
The combined brands have £84bn of assets and £70bn of customer loans, £58bn of which is made up of mortgages – double the size of any challenger bank.
The union gives the Virgin Money brand the scale to disrupt the dominance of the big four banks – Lloyds Banking Group, Barclays, Royal Bank of Scotland and HSBC – which together have a 70% share of the current account market.
Virgin Money said in a statement: ‘Today marks the start of a new chapter. We have teamed up with CYBG and together we will have the size, scale and opportunity to transform UK banking.’
Are my savings safe?
The Financial Services Compensation Scheme (FSCS) protects up to £85,000 of the money you deposit per institution.
Under the current rules, you can deposit up to £85,000 with Virgin Money and the same amount across Clydesdale Bank, Yorkshire Bank and its digital bank B with full protection.
But given that CYBG plans to rebrand its operations under Virgin Money, it seems likely that just £85,000 deposit protection will apply across the group’s products.
So, if you have large amounts of savings or money in a current account with both institutions, you may need to rearrange your deposits to ensure they qualify for FSCS protection after the deal completes. This might be a worry to those with fixed-term bonds that penalise you for early withdrawals.
However, for now, the message from both CYBG and Virgin Money is that customers deposits are still protected, since the merger will be phased in over the next three years.
CYBG also confirmed that those with fixed-term products would only be migrated at the point of renewal, so customers will have the freedom to move their cash around then.
Both brands told Which? customers will be given notice and kept informed if there are any changes that affect their contractual terms and conditions.
- Read more: who owns who in the savings market?
How will existing products be affected?
CYBG and Virgin Money both offer a range of current accounts, loans, mortgages, savings and Isas, credit cards and insurance products. We asked both groups how existing customers will be affected by the merger.
CYBG told Which? those products with fixed terms, such as mortgages and savings, would only move to CYBG at the point of renewal, should customers want to remortgage or renew their account.
It added that any changes to other products’ terms and conditions would be communicated clearly.
Virgin Money confirmed the proposed phased migration and rebranding approach will be separated into ‘several distinct phases’ aligned with ‘transaction events’ that minimise the complexity to deliver and any impact on customers.
Will there be new products?
One upshot of the merger of the brands is the potential for more innovative products.
In a statement Virgin Money said: ‘As the CYBG retail brand transitions to the Virgin Money brand over the next three years, we will be able to offer a much wider range of products, bringing huge benefits for customers and employees alike.’
The new group will offer a mix of product expertise, CYBG is a band known for good personal and business current accounts and Virgin Money has expertise in credit cards and savings.
- Find out more: how to find the best savings account
Will banking services improve?
It’s estimated the merger will mean 1,500 jobs will be cut, but bosses say the group will strive to provide ‘the best service in the UK.’
Right now both groups have below average Which? customer scores for their current accounts.
Which? customer scores are worked out using a combination of overall satisfaction and how likely the respondents are to recommend their bank to a friend.
Virgin Money has a score of 67% when it comes to current accounts, compared to 62% on Clydesdale Bank and 65% on Yorkshire Bank deals – all below the average of 68% across all providers.
- Find out more: Best and worst banks
Will there be more bank branches?
CYBG has 159 branches in the UK while Virgin Money has 74, so customers will benefit from having an enhanced branch network once the deal is finalised – providing no more are closed down.
Which? analysis shows CYBG has shut down 60 Clydesdale Bank and 74 Yorkshire Bank branches between 2015 and 2018, totalling 134, or 46% of their network.
We asked CYBG and Virgin Money if they planned to close any branches as part of its plans, and a CBYG spokesperson told us the combined group will maintain a national network of branches, as it forms a key part of their plan to impress customers.
- Read more: Bank branch closures
Will the migration cause disruption?
With the botched TSB migration earlier this year, customers might be fearful of how such a huge merger might impact their day-to-day banking.
However, both groups confirmed that the IT migration will be phased over 36 months ‘to minimise execution risk with operational integration phased over a similar timeframe’.
CYBG told Which? that it intends to use its own iB technology platform and migrate approximately 30% of all the combined group’s accounts over.
There are around 100,000 Virgin Money personal current accounts to move, which CYBG plans to do using the automated Current Account Switch Service (CASS).
The group also expects to migrate a significant majority of Virgin Money mortgages and savings products on renewal to avoid disruption, while CYBG credit card customers will be brought across to the Virgin Money’s platform, which is a process the Virgin says it has used ‘many times’.
Beware of scams
CYBG says all existing customer passwords, login details and account numbers will stay the same.
Beware of anyone contacting you out of the blue claiming to be CYBG or Virgin Money and asking for personal details, or to move money between your accounts, as this is likely to be a scam.
If you’re a customer of any of the brands, follow these tips to keep safe during this transition process:
- Don’t assume a text, phone call or email from someone claiming to be your bank is genuine. If you’re not sure contact the customer service team
- Never disclose security details (such as your PIN or password) – a genuine bank will never ask for this
- Don’t give out your account details or make payments unless you’re sure who you’re dealing with
- Don’t panic and don’t let yourself be pressured into taking action
Find out more: how to spot a scam