Reportedly, the owner of Clydesdale and Yorkshire banks, CYBG, has presented a revised £1.7bn offer to merge with Virgin Money and establish a challenger bank that is worth £4bn.
The news regarding the interest of CYBG in Virgin Money first surfaced at the beginning of May when the company made a preliminary approach that valued the company at £1.6bn, with an offer of 1.1297 of its shares for every share of Virgin Money.
As matters currently stand, CYBG has until 1600 GMT (12 p.m. ET) on Monday to present a firm offer or walk away from Virgin, under the rules that are set down by the Takeover Panel of the United Kingdom.
Some sources were quoted by Sky News. They said that the sides were holding “positive discussions,” and that they were expected to ask the Takeover Panel for a week-long extension for the deadline in an attempt to come up with a formal agreement.
Virgin was founded and is partly owned by Richard Branson, an entrepreneur. It has since been tight-lipped regarding the bid after the first offer, disclosing only that it was reviewing the said proposal.
If the firm did continue to merge, it would form a personal and SME banking group that has 6 million customers and a balance sheet of £70bn.
A merger could be vital for the banking market of the United Kingdom, as it would be a test of whether medium sized challenger banks can create a strong threat to the big five banks – HSBC, Barclays, RBS, Santander, and Lloyds.
Some other challengers have recently had a tough time, as TSB was affected by a major IT crisis last May and the Co-op bank returns from a series of problems that could have wiped the firm out during the previous year.
Virgin Money and CYBG refused to issue a comment regarding the matter.