The 181-year-old Clydesdale banking name will disappear soon after the challenger bank that owns the business announced plans yesterday to rebrand itself Virgin Money.
CYBG said that it would drop the Clydesdale name, which dates back to 1838, as well as the Yorkshire brand, which goes back 160 years, in the wake of its £1.7 billion takeover of Virgin Money last year.
The revamp was announced in a strategy update by the banking group, in which it also disclosed that it was aiming for a further £50 million of cost savings from the Virgin Money purchase by 2022. This lifts its savings target to £200 million and marks the second time that it has increased the estimate. It was aiming originally for £120 million but raised that to £150 million in February.
CYBG is one of a host of challengers that are trying to take market share from the Big Four high street lenders comprising Barclays, HSBC, Lloyds and Royal Bank of Scotland, and it said yesterday that it wanted to “disrupt the status quo”. It had 6.4 million customers as of the end of March. It is run by David Duffy, 57, the chief executive who steered the business through its demerger from National Australia Bank and its flotation on the London Stock Exchange three years ago.
CYBG became Britain’s sixth biggest lender through the all-share deal with Virgin Money, the bank set up by Sir Richard Branson, but it is looking for new ways to grow still further. The strategy it set out to the City yesterday includes a plan to focus on boosting its personal and business banking businesses.
However, it will seek to maintain rather than expand its 4 per cent share of the British mortgage market. The decision comes amid a price war in the market that has been driven in part by ringfencing rules designed to protect banks’ high street operations from the risks taken in their investment banking divisions. The capital that has been put into banks’ ringfenced businesses is being poured into mortgages, sparking ferocious competition.
“It’s a dislocated market with artificial pricing and I’m not going to play that game at the expense of our shareholders,” Mr Duffy said. “We won’t grow at very thin margins.”
The bank licenses the Virgin Money name from Sir Richard’s Virgin Group and plans to start its rebranding this year. It will shed its CYBG corporate name in favour of Virgin Money UK by December.
“It is a very efficient way of us going from two local, regional brands to a single national brand in an instance at a fraction of what it would cost us to build that,” Mr Duffy said, adding that the bank wanted to offer services in conjunction with other Virgin-branded businesses, such as discounted gym memberships or flights.
When CYBG struck the Virgin Money acquisition, it said that it expected its workforce to shrink by about 1,500 from 9,500 staff at present. Asked if the extra £50 million in savings meant more job losses, Mr Duffy said: “No, not really.” Instead, he said that additional savings could come from renegotiating contacts and eliminating duplicated systems.
CYBG is also aiming to lift its return on tangible equity to more than 12 per cent by 2022, up from an underlying figure of 10.4 per cent as of March 31.