"The combination of CYBG and Virgin Money will create the first true national competitor to the status quo in UK banking"
The combined business will become the UK's sixth-largest bank, but around 1,500 jobs expected to go as a result of the acquisition.
Following completion of the offer, Virgin Money Shareholders will own approximately 38% of the combined groups.
Jim Pettigrew, chairman of CYBG, David Duffy, CEO of CYBG and Ian Smith, CFO of CYBG will all retain their current positions in the combined group.
Jayne-Anne Gadhia, CEO of Virgin Money, has been in her current role for over 10 years and has agreed to support the combined group as a senior adviser to the CEO (in a consultancy role) for a period of time beyond completion.
David Duffy, CEO of CYBG, commented: "The combination of CYBG and Virgin Money will create the first true national competitor to the status quo in UK banking, offering a genuine alternative for consumers and small businesses.
"By combining two of the UK's leading challenger banks, we will create a national, full-service bank with the capabilities needed to compete effectively with the large incumbent banks. We are bringing together CYBG's 175-year heritage in serving retail and SME customers and advanced digital technology, with the iconic Virgin Money brand and consumer champion credentials.
"Together we will serve around six million customers, with the scale, capabilities and financial muscle to disrupt the status quo - and with a clear ambition to provide our customers with the best service in the UK.
"CYBG and Virgin Money have similar values, with strong roots in our regional heartlands and a shared vision for how the Combined Group can be a leading force in the banking model of the future, whilst maintaining our strong people-focused values. I am hugely positive about what we can achieve together with the talent that is available on both sides."
Jayne-Anne Gadhia, CEO of Virgin Money, added: "When Virgin Money was established in financial services in 1995, we vowed to change the world of banking for good.
"We were the first UK financial services company to offer investment products directly to customers. We transformed the mortgage market and, as a result, saved customers hundreds of millions of pounds by introducing daily mortgage interest calculations. In January 2012 we successfully acquired Northern Rock and built a broader business from the solid foundations and wonderful people of the North East of England.
"Since January 2012 we have more than doubled our customer lending and delivered strong and growing profitability. There are now just over 3,200 Virgin Money colleagues serving 3.4 million customers.
"The offer reflects confidence in our strategy, our track record of delivery and the complementary strengths of the two businesses. The combination of Virgin Money with CYBG will have greater scale to challenge the big banks. It will also accelerate the delivery of our strategic objectives, particularly the expansion of the products we offer to customers.
"I am especially pleased that we have received a number of important commitments from CYBG. The Virgin Money Foundation will continue to contribute to essential programmes in the North East and beyond. We have obtained assurances from CYBG regarding our employees (including a commitment to leverage the best talent from both CYBG and Virgin Money) and our Gosforth headquarters. The Combined Group will remain a committed voice behind the Women in Finance Charter as well as working to reduce the gender pay gap.
"This is a compelling deal for our shareholders, that accelerates value delivery and represents the beginning of the next chapter of the Virgin Money story."
