Monday 16 July 2018

Duffy's CYBG slides on losses

David Duffy
David Duffy

Emma Rumney and Lawrence White

Shares in Britain's CYBG fell as much as 6pc on Tuesday, as the lender reported a disappointing first-half loss of £76m (€87m) and gave no update on its bid for Virgin Money.

The slide in CYBG's stock will depress the value of its share-based bid for Virgin Money announced last week, which it said would create one of Britain's biggest lenders.

CYBG owns Clydesdale and Yorkshire Bank. It is headed by former AIB chief executive David Duffy, who led a stock market listing in 2016 after it was spun off by National Australia Bank.

Shares in Virgin Money stood 3.8pc lower by late morning yesterday, as investors assessed the impact of the reduced buying power of the stock on the likelihood of the £1.6bn deal closing.

CYBG's disappointing set of first half results highlighted the importance of the deal to its long-term fortunes, with analysts seeing the stronger Virgin Money brand as a key attraction for CYBG.

"This shows the strategic imperative for CYBG to deliver on a Virgin deal, because the problem they've got is revenue and what's clear is that a Clydesdale or a Yorkshire bank brand doesn't cut the mustard," said Edward Firth, managing director for UK banks and Brokerage Keefe, Bruyette & Woods.

"Clearly a Virgin brand across the whole group could revolutionise the outlook, but they're not paying enough."

Its bid for Virgin Money comes as Britain's mid-sized banks fight the competitive squeeze from bigger rivals with more to spend on tech, and from nimbler digital-only banks with lower costs. (Reuters)

Irish Independent

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