Virgin Money’s chief executive has said that the lender’s £1.7 billion takeover by CYBG is a testament to how far the UK banking sector has come, 10 years on from the financial crisis.
Jayne-Anne Gadhia said that the past decade has given industry challengers like Virgin Money a chance to improve their customer offerings and compete with the British bank majors, which were trying to pick up the pieces following the banking crash.
The advent of the CYBG-Virgin deal proves that the banking industry is now on a stable footing, she said.
“It shows how strong it is, really. You know, we’ve got two very successful organisations with limited overlap in terms of products able to contemplate joining forces and becoming more than just a challenger bank,” she said in an interview with the Press Association.
“A combination between CYBG and Virgin Money will create the sixth biggest bank in the UK, and that has to be a stable competitor for the future.
“So I do think that means over the 10-year period we’ve created more competition and more robust systems, I genuinely believe that.”
CYBG – the owner of the Clydesdale Bank, Yorkshire Bank and B brands – earlier this year agreed to acquire Virgin Money in a deal valuing its target at around £1.7 billion.
It is one of the biggest for the banking industry since the financial crisis, though other recent deals have seen smaller lender Aldermore bought by South Africa’s FirstRand in a £1.1 billion takeover, and Shawbrook, taken over by private equity firms last year in an £850 million deal.
But the environment is not necessarily ripe for a raft of consolidation, the chief executive said, insisting that competition is strong, not least thanks to upstarts like digital bank Monzo.
“I’d say the smaller, new banks are doing their bit for competition, too,” she said.
In the past decade, challengers have grown from “relatively small to being much more slick, much more capable, much bigger, much more resilient”.
“Monzo said that it’s got one million customers now and that’s properly competitive, and I think that’s good for customers,” Mrs Gadhia added.
“So all in all I think it’s a healthy time for the banking sector.”
But the big incumbents, having finally gained their footing, are not standing still.
RBS is trialling two standalone digital banks under its NatWest brand as it mulls whether to launch a raft of online-only products to market.
Reports emerged earlier this month that HSBC is working on its own digital bank for businesses banking, which could launch by the end of 2018.
RBS has also teamed up with partners like digital challenger Starling to help develop its digital offerings.