Tuesday 11 December 2018

Ex-AIB boss bids for Branson bank

David Duffy, former ceo of AIB
David Duffy, former ceo of AIB
Donal O'Donovan

Donal O'Donovan

FORMER AIB boss David Duffy has launched a £1.6bn takeover bid for Virgin Money. A deal would consolidate Duffy's CYBG, owner of Clydesdale and Yorkshire Bank, as the main so-called challenger bank in the UK market.

CYBG listed in London in 2016 after it was spun off by National Australia Bank. A successful merger with Virgin would create Britain's sixth-largest bank, according to analysts. It's now up to Richard Branson, founder of the Virgin business empire, to review the bid that could turn the lender he founded almost 25 years ago into one of Britain's biggest banks.

Britain's mid-sized 'challenger' banks' shares rose sharply, after the approach prompted speculation that long-awaited consolidation in the sector could become a reality.

Shares in Virgin Money, of which airlines-to-music mogul Branson owns about 35pc, rose as much as 9pc after the all-share takeover offer.

Rivals, including Metro Bank and OnesavingsBank, also rose as investors bet on which of the challenger banks might be next to merge. UK challengers rose to prominence to meet a shortfall in small business lending left by the bigger banks after the financial crash. But they face competition from a new breed of smaller digital-only 'neo-banks' such as Monzo, Starling and Atom.

Under CYBG's takeover plan, Virgin Money would own about 36.5pc of the combined company.

"We think Virgin shareholders will be lukewarm on the proposal," said analyst John Cronin at Irish broker Goodbody, adding that he expected a protracted takeover battle could now happen as the two parties jockey over price. (Additional reporting Reuters)

Irish Independent

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