The recent £1.7bn takeover of Virgin Money by the Clydesdale and Yorkshire Banking Group is expected to lead to the loss 1,500 jobs, many of which will be in senior management positions. The redundancies could amount to 16 percent of the current 9,500 full-time staff across the two businesses and will come as a significant blow to the UK’s uncertain financial sector.
The UK’s sixth-largest bank
The deal will see Clydesdale and Yorkshire Banking Group (CYBG) combine with Virgin Media to create the UK’s sixth-largest bank, with 6 million personal and small business customers. By combining the two largest challenger banks, the new bank is set to become the first true competitor to the established big five.
As part of the deal, the Clydesdale and Yorkshire Bank brands will disappear from our high streets and be replaced by the Virgin Media brand. But while this might help to bring much-needed competition to the banking sector, in the short-term, it’s the employees who look set to suffer.
Job cuts feature heavily
At the moment, it’s unclear how many of the 1,500 jobs will be lost from each organisation. However, with significant overlap in operational positions following the acquisition, the loss of jobs where roles are duplicated is inevitable.
A spokesperson for the Clydesdale and Yorkshire Banking Group said the redundancies will predominantly be in back office functions, with frontline roles unlikely to be affected. The job losses are set to take place over an extended period and existing contractual arrangements with Virgin Money employees will be honoured. The CYBG spokesperson also said that they “did not envisage” any material changes would be made to existing employment conditions or pension plans.
The North-East likely to be worst hit
The announcement will understandably cause concern in Virgin Money’s Newcastle headquarters, where many of the staff survived the collapse of Northern Rock following the 2008 financial crisis. However, despite the job losses, the Clydesdale and Yorkshire Banking Group has pledged that there will be “no major changes” to operations at the Gosforth offices, as it sees it as a “major advantage” for the combined bank.
Employees who are affected by the redundancies will receive some reassurance from the banking group’s pledge to retain Virgin Money’s redundancy policies for the next three years.