British financial institution CYBG was bought by Virgin over a year ago, and on Thursday (Oct. 31), it was renamed Virgin Money UK.
The Financial Times is reporting that the merging of the two businesses was meant to make a stronger rival for Britain’s biggest banks.
The new group has a combined market cap of £2 billion, which is less than what both companies were worth when the deal was announced last June.
The value of Virgin Group’s stake has dropped £221 million since the completion of the takeover, and one person said Virgin owner and billionaire Richard Branson had “lost his golden touch.”
The bank seems to be moving forward, and it hopes that the new name will spark a new direction toward market dominance and profitability.
“If you look from a pure share price perspective it’s been a difficult period, but we’re never in these things for the short term,” said Josh Bayliss, chief executive of Virgin Group. “This was always a long-term play around what we saw as being a cornerstone asset.”
Ian Smith, Virgin Money chief financial officer, said the deal was “a chance to build a new narrative, one that’s more focused on customers and growing the business.”
Merging the businesses has not been easy. Some former Virgin Money workers complained that a profit warning linked to a payment protection insurance issue caused a drop in value. CYBG workers have also complained that they work longer hours under the Virgin umbrella.
There are also 1,500 job cuts as the company tries to right itself.
“Offering current accounts and business banking brings reputational risks far in excess of what [Virgin] had before,” Smith said. “They did a lot of due diligence, and we have an agreement that seeks to provide the right protection for both sides.”
Bayliss said that the company will continue to push forward regardless.
“We know there will be ups and downs along the journey but the critical thing is do we continue to think the merger makes sense? And I think the answer to that is absolutely,” he said.