In a statement (91-page / 779KB PDF) confirming the details of CYBG's offer, the companies said the merger would "create the UK's first true national competitor to the large incumbent banks". The merged company would account for the UK's six largest bank with approximately six million customers.
The deal is subject to several conditions being met, including it meeting with approval from shareholders and being cleared by the UK's main competition regulator, the Competition and Markets Authority (CMA).
The companies indicated that they see technology as central to enabling the merged company to effectively challenge the dominance of the UK's 'big five' banks.
"CYBG has an established, proven, scalable and resilient, open banking-enabled technology platform which has facilitated the development of innovative services for customers such as mobile cheque clearing and account aggregation using secure, open APIs," the statement said. "The addition of Virgin Money's iconic national brand to this existing proposition is expected to increase customer awareness and interest in the offering."
"CYBG is in the process of migrating its retail and SME products onto its open banking-enabled technology platform, with retail customers already successfully migrated and SME customers in the process of migrating during 2018. This has provided the opportunity to test and demonstrate the scalability of the platform. The Combined Group will benefit in the future from CYBG's technology platform supporting all products, services and customer interactions. This will deliver business advantages in terms of flexibility, security and data insights. In addition, it will allow Virgin Money to avoid the significant investment and time required to build its own digital bank," it said.
The companies expect to deliver annual pre-tax cost savings of £120m by the end of the financial year ending 30 September 2021 as a result of the merger, while Jayne-Anne Gadhia, chief executive of Virgin Money, said the merged company would "remain a committed voice behind the Women in Finance Charter as well as working to reduce the gender pay gap".