Welcome to Swire Chin's List of International Banking M&As

Welcome to Swire Chin’s List of International Banking Mergers and Acquisitions. This web site aims to chronicle the corporate genealogy and M&A history in the banking industry. Over 80 of the world's largest and most well-known banks have been documented.

Click on Index to access all earlier publications. Existing publications are updated whenever a major banking acquisition or divestment is announced.

Like many people nowadays, I’ve a love-hate relationship with banks. I do, however, enjoy reading and recording the history of commercial banks. Please feel free to email me if you’ve any comment. My email address can be found on the "About Me" section of the web site.

Spain Bank Mergers & Acquisitions (Bankia)

Photo: Bankia's head office building at plaza de Castilla in Madrid. (Credit: Bankia's official web site.)

Bankia

Even though Bankia was created only in 2010 from the amalgamation of seven de facto bankrupt Spanish regional savings banks, its oldest constituent predecessor -- Caja Madrid -- dates from 1702. 

Before the 20th century, a state-funded social welfare system to alleviate the hardship faced by the poor during an economic recession was practically non-existent. To help the underclass to survive, the Roman Catholic Church had historically run charitable pawnshops to allow the poor to obtain a small temporary loan (at zero or very low interest rate) or to convert whatever few possessions that they had into cash. The mandate of these charitable pawnshops and loan institutions was not to maximize profits but to offer blacksmiths, farmers, labourers, artisans, servants and the unemployed financial assistance in times of need.

The first church-sponsored charitable pawnbrokers began in Italy in the 1460s, and the concept spread to Spain and Portugal and eventually to their overseas colonies also. In Spain, such a charitable pawnshop and loan office was known as a “monte de piedad”, or literally a mound of piety. In 1702, an Aragon priest named Francisco Piquer Rudilla established a Monte de Piedad in Madrid, which relied on donations by the city’s wealthy aristocrats to provide small interest-free loans to the working class and underclass on collateral such as tools, clothes or jewellery. In 1836 the Monte de Piedad de Madrid began charging moderate interest on loans to cover increasing operating overhead costs.

In 1838, a Royal Decree created a savings bank known as the Caja de Ahorros de Madrid (literally, the Savings Casket of Madrid), which is based on the non-profit savings bank model of promoting savings for the working class. The savings bank also had a mandate of social responsibility and Unitarianism by financing local businesses, as well as educational and hospital infrastructure. During much of the 19th century, Caja de Ahorros and Monte de Piedad offered similar service to similar customers.

In 1896, the Monte de Piedad and Caja de Ahorros de Madrid merged to become Monte de Piedad y Caja de Ahorros de Madrid, whose order of the words was reversed eventually to Caja de Ahorros y Monte de Piedad de Madrid as the banking side of the business became much more prominent than the pawnbroking side.

Over time, as the state took increasing responsibility for social welfare from the Church, the savings bank dropped the “Monte de Piedad” part of the name completely and became known simply as Caja Madrid.

A modernization program in the 1970s led to Caja Madrid offering more banking products than previously. During the decade many of its systems and processes were also computerized. Then between the 1980s and 1990s, the bank expanded geographically outside of the capital region.

Caja Madrid’s nationwide expansion in the latter half of the 1990s coincided with a decade-long real estate bubble that started in 1996 and burst in 2008. As in most asset bubbles, the causes of the housing craze are complex and inter-related. The discussion and theorization of which is not the intention of this article. Suffice to say that between 2000 and 2007, some over 600,000 new dwellings were built yearly in Spain, a number that exceeded the combined figure of the other four major EU economies Germany, France, the United Kingdom and Italy. In total, some five million new homes were constructed in those eight years by the time the speculative housing craze came to a sudden end.

Riding this mad real estate euphoria, between 1996 and 2010, Caja Madrid expanded exponentially and grew five times in size and became the No. 4 financial institution in the country. But perhaps much more tellingly about Caja Madrid’s over-sized exposure to the housing market, the No. 4 ranked Caja Madrid held the most real estate loans amongst all Spanish banks.

The overheated housing bubble was not confined to Spain, as similar market conditions also happened in the United States, Great Britain, Ireland, Iceland, Portugal, Italy and Greece; and to a lesser degree other markets around the world. In 2007, the unsustainable housing bubbles first began to burst in the U.S. and Britain, then quickly spread to other markets. This marked the beginning of the infamous 2007 global credit crisis. Banks around the world saw their formerly steady and cheap funding sources disappeared overnight as the inter-bank credit market froze. Banks and institutional investors refused to renew short-term financing for real estate loans that were at risk of default. Banks, investment funds and credit default swap policy holders found themselves exposed to an incredibly complex and untraceable web of liabilities, potentially exposing themselves to trillions of losses.

In Spain, Caja Madrid was not alone in the midst of this liquidity crisis, as Spain’s entire savings bank industry had been lending recklessly to the real estate speculation. Massive loan losses quickly depleted many banks’ capital base and by July 2010, Spain had to place seven de facto bankrupt regional savings banks (Caja Madrid, Bancaja, Caja Canarias, Caixa Laitana, Caja Rioja, Caja de Ávila and Caja Segovia) into the Sistema Institucional de Protección (“SIP”, literally Institutional Protection Scheme). 

Five months later, the Banco de Espana (Spain’s central bank) formally brokered the consolidation of the seven regional savings banks in the SIP under the administration of Banco Financiero y de Ahorros (roughly “Bank of Finance and Savings”), or commonly known as BFA.

The foundation that used to own Caja Madrid ended up with 52% of BFA, followed by Bancaja owning just under 38%, and the remaining five small savings banks collectively held just over 10%. Meanwhile, the Spanish government provided the bank with EUR 4.465-billion of liquidity to keep it afloat. 

In March 2011, Bankia was chosen as the new name for the seven consolidated savings banks. Just four months later, the Spanish government rushed to float Bankia on the stock market but found little interest from international institutional investors. Failing to attract overseas professional investors, Bankia turned to those domestic individuals who had little or no knowledge of investing risks and the inside situations of the bank. Bankia branch managers and union leaders encouraged long-time customers and employees to invest by assuring safe and steady returns.

Bankia’s initial public offering in July 2011 raised EUR 3.1-billion when 47.6% of the bank was floated on the stock market, of which 60% of the IPO was offered to 350,000 individual investors. BFA continued to own 52.4% of Bankia.

Unfortunately, less than one year after the IPO, in May 2012 Bankia discovered major discrepancies in its financial accounts, which led to its 2011 financial statement being re-stated from a profit of EUR 309-million into a massive EUR 3.3-billion loss. Immediately Bankia was once again on the verge of collapse. The Spanish government converted its 2010 EUR 4.465-billion loan into preferred shares and took over 100% of BFA, wiping out the stakes of the seven savings banks that formerly owned Bankia. Through BFA, Spain now indirectly controlled 45% of Bankia and became its largest shareholder.

Shockingly, that loan conversion to re-capitalize Bankia was far from enough, and its collapse – if allowed to happen -- would have triggered Spain’s deposit guarantee fund to cover a staggering EUR 60.5-billion of insured deposits. Despite that, depositors would still suffer losses of EUR 52-billion from uninsured deposits. To avoid this disastrous scenario, between December 2012 and December 2013, another Eur 17.96-billion of state aid was injected to BFA (EUR 7.34-billion) and Bankia (EUR 10.62-billion), bringing the total rescue package for Bankia to EUR 22.42-billion. In the restructuring, BFA’s stake in Bankia was raised to 68.4%. The small retail shareholders who bought shares in the 2011 IPO essentially saw their investment wiped out when the shares dropped to “penny stock” levels.

Meanwhile, to satisfy the terms of the state bailout, Bankia sold its American subsidiary City National Bank of Florida to Chilean bank BCI for USD $883-million in May 2013. Caja Madrid originally bought 83% of the City National Bank of Florida for $927 million cash in 2008.

Following a period of stabilization of its books, BFA sold a 7.5% stake of Bankia in February 2014 for EUR 1.3-billion to international institutional investors, representing the first time the Spanish state received a repayment following the EUR 22.42-billion provided to the bank. 

Meanwhile, small investors who lost their investment during the first Bankia IPO in 2011 battled in the courts to get compensation. Finally, in January 2016, a Spanish Supreme Court ruling forced Bankia to agree to return the money that the small investors lost when the bank was nationalized in May 2012. Bankia later committed EUR 1.84-billion to fully refund its retail investors for their losses in the doomed 2011 initial public offering.

Then in December 2017, BFA sold another 7% of Bankia for EUR 818-million, reducing its stake to 60.6%. The mathematics of BFA’s investments and divestments in Bankia between the 2013 and 2017 does not work out based on the official press releases. One can only presume that BFA had converted some of Bankia’s debts into equity holdings.

In 2018, Bankia bought Banco Mare Nostrum in stock for EUR 825-million. Like Bankia itself, Banco Mare Nostrum was created through the amalgamation of several bankrupt savings banks (Caja Murcia, Caixa Penedès, Caja Granada and Sa Nostra).

In September 2020, Bankia agreed to merge with fellow Spanish lender CaixaBank to create the largest Spanish bank in terms of domestic market share and assets. The acquisition valued Bankia at EUR 4.3-billion (USD $5.2-billion). At the end of 2019, Bankia served almost eight million clients via its mobile and on-line platforms, over 5,300 ATMs and almost 1,700 branches.

The CaixaBank-Bankia merger closed in March 2021 and the Spanish state’s 61.8% stake in Bankia would be diluted to 16.1% of the enlarged CaixaBank. The La Caixa Foundation, one of Europe’s biggest charities, would remain CaixaBank’s largest shareholder with 30 per cent of the group compared with its current 40 per cent stake.

Click here to return to the Index page.

United States Bank Mergers & Acquisitions (BB&T)

 

A BB&T office in Greensboro, North Carolina. 

Photo credit: Warren LeMay. You can see more of his photos via this link: https://www.flickr.com/photos/warrenlemay

BB&T (Branch Banking & Trust)

BB&T traces its origins to eastern North Carolina in the aftermath of the American Civil War (1861 to 1865) during which the area was struggling to recover and rebuild from the devastation of four years of bloody fighting between the Union and Confederacy forces. Countless lives were lost, and the livelihoods of those who survived were often ruined. Many families were physically and emotionally torn across both geographical and ideological battle lines. The economy, along with many farms and towns, and businesses and homes suffered catastrophic damages. The end of the Civil War unfortunately did not mean the end of the divisiveness, distrust and political and personal resentments.

Against, or perhaps one should say despite this hardship, Alpheus Branch, the son of a wealthy planter in Halifax County, moved to Wilson County and eventually married Nannie Barnes, the daughter of prominent figure General Joshua Barnes and one of Wilson’s early founders. Alpheus Branch launched a mercantile business called Branch & Co. and he became acquainted with Thomas Jefferson Hadley, another important local leader. In 1872, Alpheus Branch and Thomas Jefferson Hadley joined forces and launched a private bank named Branch & Hadley. The new concern accepted deposits and made loans to local planters and businesses. The U.S. Southeast by the 1880s had returned to rising prosperity, as the traditional crop of cotton was supplemented by the new cash crop of tobacco. In 1887, Mr. Branch bought out his partner’s interests and Branch & Hadley became Branch & Co., Bankers.

Then in 1889, Alpheus Branch, his father-in-law Gen. Joshua Barnes, Branch’s old business partner Thomas Jefferson Hadley, along with J.F. Bruton, R. L. Thompson and Walter Brodie were granted a state charter from the North Carolina legislature to establish the Wilson Banking & Trust Co. The original intention of the new business was to offer banking, trustee and custodian services but a legislation change prevented the banking concern from actually carrying out its trust business until 1907.

Meanwhile, Alpheus Branch had died in 1893 and in 1900, his private bank Branch & Co., Bankers was incorporated into the Branch Banking Co., holder of the state charter and successor to the Wilson Banking & Trust Co. following two name changes. In 1913 – some six years after the launch of the trust services, Branch Banking Co. changed its name to Branch Banking & Trust Co., or BB&T for short.

In comparison with Europe, mainland United States escaped World War I physically unscathed and enjoyed a booming economy in the 1910s and 1920s. During this time, Branch Banking & Trust earned the reputation as one of the larger and stronger banks in North Carolina. The bank also expanded into the insurance and mortgage loan markets in 1922 and 1923 respectively.

When America’s over exuberance collapsed in 1929, the ensuing stock market crash and Great Depression caught many ordinary people and businesses big and small off-guard. Between January 1930 and January 1932 alone, well over 100 banks in North Carolina went bankrupt when their borrowers defaulted on their loans. As panics set in, bank runs saw the public transferring their deposits from Wilson’s seven other banks to the government-run United States Postal Savings System. What many didn’t know was that the postal savings system was not a bank on its own per se, but simply re-deposited the funds to designated banks. In Wilson County’s case, the postal savings’ banker was none other than Branch Banking & Trust. Thus, while Wilson’s other banks collapsed, BB&T enjoyed the confidence of government officials and remained financially healthy. As a matter of fact, as hundreds of banks failed in North Carolina between 1929 and 1933, BB&T’s network grew from five to eleven branches, and total assets increased almost threefold. 

The 1930s slump then came to an abrupt end when World War II broke out in 1939, as wartime demand for military machinery and foods trumped other concerns. Notwithstanding its massive tolls to lives, properties and the environment elsewhere, the global conflict lifted the American economy, employment and prosperity. A combination of patriotism and war-time restrictions on the production of non-war-related civilian consumer goods also caused personal savings to rise steadily, as things were just generally not available for sale. When peace returned in 1945, the returning soldiers and a massive influx of immigrants from war-torn Europe and other parts of the world to the U.S. led to a sharp increase in the demand for consumer goods, automobiles, machinery, infrastructure construction, housing, food staples, and consumer and business services – in other words – everything.

BB&T rode on this unprecedented post-WWII growth and the height of the so-called “American century” so that by the end of the 1960s, it ran a network of 60 branches in 35 cities in North Carolina. Legislative changes in the 1980s and 1990s slowly loosened up inter-state banking restrictions in the U.S., and by 1994, BB&T’s network numbered over 260 branches across both North and South Carolina. By this time, BB&T was the fourth largest bank in its home state.

In late 1994, BB&T Financial Corp. and Winston-Salem-based Southern National Corp. (fifth largest bank in North Carolina) agreed to merge in a deal that was valued at USD $2.2-billion. The combined bank became the largest bank in terms of deposits in North Carolina and the No. 3 in South Carolina with over 430 branches, including a small operation in Virginia. This merger also led to the new bank transferring its headquarters from Wilson to Winston-Salem, the home base of Southern National Corp. In 1996, Southern National took over United Carolina Bancshares Corp. for USD $985-million. United Carolina had a network of 153 branches across North and South Carolinas. The following year, Southern National resurrected and renamed itself BB&T Corp.

During the rest of the 1990s and the early 2000s, BB&T continued to expand outside of its stronghold in the Carolinas, buying up numerous regional and community banks one by one but yet building up an ever-increasing presence in Virginia, West Virginia, Maryland, Washington DC, Georgia and Tennessee. Some of the more significant takeovers (those valued at at least USD $200-million, or those that represented entry to a new market) are listed below.

Recent transactions:

• Between December 1997 and February 1998, BB&T bought Franklin Bancorporation of Washington, D.C. (for USD $165-million) and Maryland Federal Bancorp (USD $265-million). This marked BB&T’s first forays into the wealthy capital city area.
• In August 1998, BB&T acquired two financial institutions in Virginia: MainStreet Financial Corp. of Martinsville for USD $554-million and stockbroker Scott & Stringfellow Financial Inc. of Richmond for USD $131-million. MainStreet operated 46 branches in Virginia and three in Maryland.
• In January 1999, BB&T bought Mason-Dixon Bancshares Inc. of Westminster in Maryland for USD $257-million. The bank had 38 offices in the state.
• Also in January 1999, BB&T took over First Citizens Corp. of Newnan for USD $126-million. While the transaction was small, it became BB&T’s first entry into the state of Georgia with a network of 14 offices in south metropolitan Atlanta.
• In April 1999, BB&T purchased First Liberty Financial Corp. of Macon for USD $500-million. The purchase gave BB&T a network of 52 branches in the Macon and Savannah areas of Georgia.
• In what was its third acquisitions in Georgia in 1999, BB&T took over Premier Bancshares Inc. for USD $624-million in July. Premier had 42 branches in Atlanta and Northern Georgia.
• In July 2000, BB&T acquired FCNB Corp. of Frederick for USD $226-million. FCNB ran 34 offices in the central Maryland-Washington, D.C. corridor.
• Also in July 2000, BB&T purchased One Valley Bancorp Inc. of Charleston for USD $1.13-billion. The acquisition gave BB&T a network of 77 branches in West Virginia and another 48 in Virginia.
• In August 2000, BB&T took over BankFirst Corp. of Knoxville for USD $150-million. The small purchase was BB&T’s first entry into the state of Tennessee.
• In June 2001, BB&T bought Century South Banks Inc. of Alpharetta for USD $467-million. In doing so BB&T gained 40 offices in Georgia, North Carolina, Tennessee and Alabama.
• In August 2001, BB&T took over F&M National Corp. of Winchester. The holding company operated 174 branches and offices providing banking, mortgage, insurance and trust services in the Historic Triangle area of Virginia, Richmond and the metropolitan Washington, D.C. area.
• In November 2001, BB&T acquired MidAmerica Bancorp of Louisville in Kentucky for USD $415-million. MidAmerica operated 30 branches mainly through its Bank of Louisville subsidiary.
• Also in November 2001, BB&T took over AREA Bancshares Corp. for USD $451-million. AREA had 72 branches in Kentucky.
• In May 2002, BB&T bought Regional Financial Corp. (First South Bank) of Tallahassee for USD $275-million. First South Bank operated 22 offices in Tallahassee and the Florida Panhandle, Jacksonville, and along the Gulf Coast from Beverly Hills to Naples.
• In January 2003, BB&T made a big expansion in Virginia when it acquired First Virginia Banks Inc. for USD $3.38-billion. First Virginia’s subsidiaries operated 364 branches in total: 298 in Virginia, 55 in Maryland and 11 in northeast Tennessee.
• In April 2004, BB&T took over Republic Bancshares Inc. St. Petersburg for USD $392-million, gaining a network of 71 branches in Southeast Florida.
• In December 2005, BB&T acquired Main Street Banks Inc. of Atlanta for USD $623-million. Main Street Banks had 29 banking and insurance offices in Atlanta and Athens, Georgia.
• In December 2006, BB&T took over Coastal Financial Corporation of Myrtle Beach for USD $395-million. It had 17 branches in greater Myrtle Beach and seven in greater Wilmington, South Carolina.
• In June 2009, BB&T repaid the U.S. government the USD $3.1-billion that it received under the Troubled Asset Relief Program (TARP) after regulators determined the bank was well capitalized.
• In August 2009 during the global credit crisis that started in 2008, Colonial Bank of Montgomery failed and was shut down by the Alabama State Banking Department and the Federal Deposit Insurance Corporation (FDIC). In a brokered agreement with the FDIC, BB&T took control of all Colonial Bank’s 346 branches and USD $20-billion of client deposits in Alabama, Florida, Georgia, Nevada and Texas. The FDIC and BB&T agreed to share losses on about $15 billion of those assets.
• In February 2019, Winston-Salem-based (North Carolina) BB&T agreed to acquire SunTrust Banks, Inc. for USD $28.24-billion in stock. Announced as a “merger of equals”, the former BB&T shareholders would control 57% of the new bank, with SunTrust holders owning the rest. The new bank would be known as Truist Financial (pronounced “True-ist”), the unusual choice of which was mocked by many after the announcement. Truist would become the No. 6 bank in the U.S. and move its headquarters to Charlotte, but Winston-Salem would become the bank's headquarters for community banking. At the time of the merger announcement, SunTrust had about 1,300 branches and BB&T about 1,800 branches. A major consolidation of the branch network was expected.

Click here to return to the Index page.

United States Bank Mergers & Acquisitions (SunTrust Banks)

Photograph by Michael Gluzman. 

Photo: A blimp branded with SunTrust advertisement seen flying high above Atlanta. Special thanks to Michael Gluzman for granting me the permission to use his image.

SunTrust Banks was formed in 1985 when the Trust Co. of Georgia and Florida’s SunBanks merged – the former traces its origins to 1891 when the Commercial Travelers Savings Bank was founded in Atlanta by businessman Joel Hurt. Two years later, Mr. Hurt and another member of the board Ernest Woodruff spurred the re-organization of the bank into the Trust Co. of Georgia to better reflect its main business lines: trust and investment banking. This name would pretty much remain in use for the next 100 years. Though locally, the financial institution was often known simply as “the Trust Company”.

Mr. Woodruff would rise to the president of the Trust Company in 1904, and under his leadership the Trust Company brokered the consolidations of numerous companies and industries, establishing its position as a prominent player in the merchant banking and investment banking business in Atlanta.

Then in 1919, Mr. Woodruff made one of the shrewdest and most storied moves in corporate America’s history when he led a consortium to purchase The Coca-Cola Company from formula patent holder Asa G. Candler for USD $25-million. Later in that same year, the Trust Company underwrote the partial flotation of The Coca-Cola Co. In return, the Trust Company received USD $110,000 (in 1919 dollars) worth of Coca-Cola shares that it held for decades. That transaction cemented the close ties between the two Atlanta institutions for the decades to come. Until 2011, the only hand-written formula recipe of the carbonated brown syrup the world has known and tasted for over 100 years was stored in a secured vault in SunTrust Banks’ head office in Atlanta. In that year, the recipe was transferred to a vault in the World of Coca-Cola, which (the vault, not the recipe) is now on public display. The Trust Co. of Georgia (and later SunTrust) also held a stake in the Coca-Cola Co. until 2012.

The 1920s was an interesting decade for the predecessor banks that became SunTrust. Back in the early years of the Trust Company, a certain Colonel Robert James Lowry had been its president, but he left in 1895 to tend to his own bank Lowry Bank. In 1907, Lowry National Bank, by then having obtained a national charter, acquired the commercial banking operations of the Trust Company, rendering the latter once again as a pure trust company. In exchange, the Trust Company received 2,000 shares of Lowry National Bank. Then in 1923, the Trust Company combined with Lowry National and gave up the latter’s national charter, and the new entity adopted the name Lowry Bank & Trust Co. of Georgia and became a state-chartered bank again.

Just one year later, a complex three-way reorganization was carried out involving Lowry Bank & Trust and Georgia’s oldest nationally-chartered bank, Atlanta National Bank: the trust business of Lowry was once again spun off and resumed the old name the Trust Co. of Georgia, while Lowry merged with Atlanta National to become Atlanta & Lowry National Bank. Initially, the shareholders of Atlanta & Lowry National also fully controlled the Trust Co. of Georgia, so both financial institutions were still closely linked. This changed in 1933 when the federal Banking Act (part of which was the so-called Glass-Steagall Act) required deposit-taking banks be separated from securities dealers, and the Trust Co. of Georgia became fully independent from the First National Bank of Atlanta, the successor bank of Atlanta & Lowry National following another merger in 1929.

During the Great Depressions of the 1930s, the Trust Company gained majority ownership of five Georgian banks outside of Atlanta – in Augusta, Columbus, Macon, Rome and Savannah. Between the 1950s and 1970s, however, a change in policy ideology led to the passing of banking regulation that witnessed Georgia having one of the most stringent “statewide banking” restrictions in the U.S. Essentially, to protect small local banks, banks based in a city or county were no longer permitted to acquire banks outside of their home turfs – in other words – banks could not cross city or county borders. This severely "boxed" Georgia's banks into their home markets until 1970. In 1971, the name Trust Company Bank and TCG Bank were adopted and when statewide banking became legal, it promptly expanded into other markets in the state.

Outside of the home state, federal legislation known as the McFadden Act (1927) and Bank Holding Company Act (1956) gave each individual state the power to prohibit “inter-state banking”, so that banks in one state could not cross the state line and operate in another state, unless the home state of the acquired bank allowed such acquisitions. The inter-state banking ban only began to be relaxed in the late 1970s, beginning in state of Maine, and very slowly spreading to other states throughout the 1980s.

In some cases, the relaxation of inter-state banking began with regional reciprocal inter-state banking agreements. In 1985, Georgia and Florida passed reciprocal interstate banking agreements allowing the banks from either state to enter each other’s jurisdiction. The relaxation started a frenzy of cross-state-line consolidations across the Southeast as banks sought to expand into neighbouring markets as well as to build up their own scale to avoid being swallowed up. In July 1985, the Trust Co. of Georgia and Orlando-based SunBanks, Inc. merged and became the first inter-state banking merger under the reciprocal agreement in the Southeast. The new parent company took the name SunTrust Banks, Inc. but the two banks remained separate legal entities for years, as full operational integration across state lines was still illegal. The newly created SunTrust banks had USD $16.3-billion of assets. Soon after, other smaller acquisitions were made.

In 1986, SunTrust entered the Tennessee for the first time by acquiring the Third National Corp. of Nashville for USD $734-million. SunTrust added Third National’s 12 banks and 134 offices in the state to its 44 banks and 480 offices in Georgia and Florida. Also in 1986, SunTrust Securities was established to expand the bank’s product line.

Following years of operating under a decentralized manner and a mishmash of separate legal subsidiaries, SunBanks in Florida, Trust Co. of Georgia and Third National in Tennessee were unified as SunTrust beginning in 1995, when nationwide banking finally became legal in most states in America.

Recent transactions:

• In 1998, SunTrust made a major move northward when it spent USD $8.6-billion to acquire Richmond-based (Virginia) Crestar Financial Corp. The purchase made SunTrust the 10^th largest bank in the country. Crestar’s 396 branches in Virginia, Maryland and the District of Columbia would join SunTrust’s 697-office network in Florida, Georgia, Tennessee and Alabama.
• Also in 1998, SunTrust spent USD $150-million to acquire Tennessee’s Securities Co., a provider of equities underwriting services.
• In 2001, SunTrust purchased the Florida network of Huntington Bancshares Inc. for USD $705-million. Already a major player in the state, the purchase bolstered SunTrust to the No. 3 bank in Florida with 59 additional branches.
• Also in 2001, SunTrust made a bold move by launching a USD $14.7-billion hostile bid for North Carolina-based Wachovia Corp. SunTrust’s offer was about $1 billion higher than the one that Wachovia had accepted from First Union Corp. However, Wachovia’s shareholders eventually opted to merge with First Union instead of with SunTrust.
• Also in 2001, SunTrust acquired institutional capital markets business Robinson-Humphrey Company from Citigroup subsidiary Salomon Smith Barney to form SunTrust Robinson Humphrey.
• In 2004, SunTrust further cemented its position in the Southeast when it took over Memphis-based National Commerce Financial Corp. for USD $6.98-billion. National Commerce Financial operated primarily as the National Bank of Commerce and Central Carolina Bank with over 460 offices in Tennessee, North and South Carolina, Mississippi, Arkansas, Georgia, Virginia, West Virginia and Alabama. The purchase made SunTrust the No. 7 bank in the U.S. and the third largest in the Southeast with just over 1,690 branches and over 2,700 ATMs.
• In 2012, partly due to more stringent federal capital requirements, SunTrust sold its remaining 59 million of the 60 million shares of The Coca-Cola Co. that it first obtained in 1919 when its predecessor Trust Co. of Georgia underwrote the carbonated drink maker’s the initial public offering. The remaining 1 million shares were donated to the SunTrust Foundation.
• In 2019, Charlotte-based (North Carolina) BB&T Corp. agreed to acquire SunTrust Banks, Inc. for USD $28.24-billion in stock. Announced as a “merger of equals”, the former BB&T shareholders would control 57% of the new bank, with SunTrust holders owning the rest, with a combined market capitalization of about USD $66-billion. The new bank would be known as Truist Financial (pronounced “True-ist”), the unusual choice of which was mocked by many after the announcement. Truist would become the No. 6 bank in the U.S. and be based in Charlotte. SunTrust had about 1,300 branches and BB&T about 1,800 branches. As 740 branches of the two banks are within two miles of each other, many of them might be consolidated within a few years.

Click here to return to the Index page.

USA Bank Mergers & Acquisitions (Truist Financial)

Truist Financial

Truist Financial Corp. was formed in December 2019 by the merger of BB&T Corp. of Winston-Salem (North Carolina) and SunTrust Banks, Inc. of Atlanta. The merger was announced back in February 2019 and at the time valued at USD $28.24-billion in stock. Announced as a “merger of equals”, the former BB&T shareholders would control 57% of the new bank, with SunTrust holders owning the rest. The unusual choice of the name was mocked by many after the announcement. Truist would become the No. 6 bank in the U.S. and move its headquarters to Charlotte, but Winston-Salem and Atlanta would both retain some "head office" functions for certain divisions of Truist.

At the time of the merger announcement, SunTrust had about 1,300 branches and BB&T about 1,800 branches. A major consolidation of the branch network was expected.

Click here to return to the Index page.

Great Britain/ India/ Hong Kong Bank Mergers & Acquisitions (Mercantile Bank)

Photo: A bill of exchange, a sort of promissory note for making payment, dating from 1859. This is one of the earliest surviving documents from the Chartered Mercantile Bank of India, London and China, which was known as the Mercantile Bank of Bombay between 1853 and 1857; the Chartered Mercantile Bank of India, London and China between 1857 and 1892; the Mercantile Bank of India between 1893 and 1957, and the Mercantile Bank Ltd. between 1958 and 1984.

Mercantile Bank Ltd.

The Mercantile Bank Ltd. had a very storied past full of ups and downs. It was once upon a time a local Indian bank, then it became a British bank, and eventually a Hong Kong bank in its final decades. The bank was founded in 1853 as the Mercantile Bank of Bombay as a trade finance bank. By 1857, the bank had opened offices in London, Madras (now Chennai), Colombo, Kandy, Calcutta (now Kolkata), Singapore, Hong Kong, Canton (now Guangzhou), and Shanghai.

In that same year of Mercantile Bank of Bombay’s founding, however, the establishment of a rival British overseas bank also with a focus on British India, China and the colonies in the Orient applied for and obtained a Royal Charter from Queen Victoria, and called itself the Chartered Bank of India, Australia and China (today’s Standard Chartered plc).

A Royal Charter used to be the only means to establish a public or private corporation, but by the mid-19^th century it certainly was not the sole process to do so. While a Royal Charter defines a corporation’s privileges and purposes such as those of a town or a city, the granting of such by the Victorian era no longer indicated, for example, Royal patronage, nor implied or express state guarantee in times of troubles. Even though a Royal Charter is technically granted only to a body or business which can demonstrate pre-eminence and stability, constitutionally or legally, there is no reason to believe that a “chartered” business is any more or less likely to be successful than those without a charter.

Nevertheless, the Mercantile Bank of Bombay felt that it was at a competitive disadvantage and did not want to be outdone by the regal sounding Chartered Bank of India, Australia and China, which had a habit of promoting itself as being “Incorporated in England by Royal Charter 1853.” Therefore, in 1857, the Mercantile Bank of Bombay also obtained a Royal Charter and renamed itself the Chartered Mercantile Bank of India, London and China, and moved its head office from Bombay to London. In doing so, the Chartered Mercantile Bank of India, London and China was often mixed up with the Chartered Bank of India, Australia and China – the fact that both banks were founded in 1853 doubtlessly added to the confusion.

Following the tradition in Great Britain at the time, banknotes in the British colonies were often issued by certain authorised commercial banks. After receiving the Royal Charter, the Chartered Mercantile Bank of India, London and China gained the privilege to issue banknotes in Hong Kong (starting in 1859), in Penang (starting in the 1860s) and later also in Malacca and Singapore. As a matter of fact, the bank played a prominent role in the early banking development in the Straits Settlements and the Federated Malay States, which became today’s Malaysia and Singapore.

In 1892, however, the Chartered Mercantile Bank suffered a liquidity crisis and had its Royal Charter revoked. It was re-capitalised as the Mercantile Bank of India in 1893, but it ceased to issue all banknotes.

In the early 20^th century, growth returned to the Mercantile Bank of India and it, for example, acquired the locally-incorporated Bank of Calcutta (founded 1895). 

In 1912, the Mercantile Bank regained the privilege to issue banknotes in Hong Kong. It also issued banknotes in the Chinese port city of Shanghai for years during the early 20^th century. (Between 1846 and 1945, Great Britain controlled “concessions” -- extraterritorial jurisdictions -- in China, and the Shanghai International Settlement was probably the most well-known one of all.) Surviving 19^th century banknotes issued by the Chartered Mercantile Bank of India, London and China from Hong Kong, Singapore, Malacca, and Penang; and even mid-20^th century examples by the Mercantile Bank of India from Hong Kong and Shanghai are very rare, and can command very significant valuations at auctions.

In 1916, the Mercantile Bank of India took over the Bank of Mauritius. This was the third bank of the same name – none of them were related to one another -- to have existed in Mauritius. This particular Bank of Mauritius was established in 1894 to take over the local operations of the Oriental Bank Corporation that had gone bankrupt. The Oriental Bank Corporation was another prominent Anglo-Indian bank that was active in British India, Ceylon, Singapore, Hong Kong and China in the mid-19^th century before its demise.

While rival British overseas banks like the Chartered Bank of India, Australia and China and The Hongkong and Shanghai Banking Corporation (HSBC) have had a strong focus in Hong Kong, China and the rest of the Far East, the Mercantile Bank’s main focus was in British India, where the bank had half of its branches.

In 1947, British India gained independence and became India and Pakistan. The newly formed nation-states wanted to nurture their own domestic industries and became increasingly restrictive to the British businesses including the Mercantile Bank of India. New regulations in place banned foreign banks from opening new branches, and growth in the 1950s for the Mercantile Bank in India was much hampered.

Towards the late 1950s, it was believed that the Mercantile Bank of India would be vulnerable to a takeover by an American bank eager to have a presence (however restrictive) in the Indian market. Ironically, right around the same time, the decision was made to drop the reference of India from the name and the bank became the Mercantile Bank Ltd.

In 1957, The Hongkong and Shanghai Banking Corporation pre-empted the rumoured American interest by first acquiring a 20% stake in Mercantile Bank Ltd., before fully acquiring the remaining shares in 1959.

HSBC kept the Mercantile Bank operations separate and independent for many years. In 1966, Mercantile Bank relocated its head office from London to Hong Kong. Interestingly, Mercantile Bank continued to be a banknote issuer in Hong Kong until 1974 (along with HSBC and the Standard Chartered Bank). In 1984, finally Mercantile Bank’s operations were integrated into HSBC, except for the small Thai operations, which were sold to Citibank. The sale of this small unit of the Mercantile Bank appeared to have caused much confusion about the final years of the bank, as many sources, including Wikipedia, often suggest mistakenly that HSBC sold the entire Mercantile Bank to Citibank in 1984.

Click here to return to the Index page.

Great Britain Bank Mergers & Acquisitions (Clydesdale Bank, Yorkshire Bank, Virgin Money)

Photo: The Virgin Money lounge in Sheffield, Yorkshire, has a complimentary bowling alley for clients to enjoy. The insets show a Clydesdale Bank branch at London's Piccadilly Circus, and a Yorkshire Bank branch in Whitby, North Yorkshire.

Photo Sources: Virgin Money lounge in Sheffield, Virgin Money; Clydesdale Bank in London, Swire Chin; Yorkshire Bank in Whitby: Swire Chin.

CYBG (Clydesdale Yorkshire Bank Group d.b.a. Virgin Money)

The Clydesdale Bank, Yorkshire Bank and Virgin Money each has a complex history and relationship with each other since their separate beginnings. They were established independently of each other but interestingly, all three banks have been under partial or full Australian ownership at one some point. Glasgow-based CYBG plc is the parent company of Clydesdale Bank and Yorkshire Bank, which in May 2018 agreed to acquire challenger bank Virgin Money for GBP 1.7-billion.

CYBG plc (Clydesdale Bank lineage)

The Clydesdale Banking Company was founded by Glasgow’s businessmen in May 1838 in the joint-stock format to serve the local market. The Clyde is a major river that flows through Glasgow, and the vale area surrounding the river is called Clydesdale. Right from its start, offices were opened in the industrial city of Glasgow as well as in the capital city of Edinburgh about 40 miles to the east. Within its first year of operations, Clydesdale also opened two country (rural) branches in Falkirk and Campbeltown.

The 19^th century was the hundred years that witnessed the most rapid, disruptive and yet transformative technological, social and economic changes in British history. Newly-invented machinery greatly expanded the output of consumer and industrial goods, as well as of agricultural produce. Meanwhile, the ever-expanding railway network not only made transportation of raw materials, finished goods, people and communications (such as news, letters and parcels) much faster and cheaper, it also allowed perishable produce to reach destinations much farther than previously possible before spoiling.

This mechanization and transportation revolution, which was part of the overall industrial revolution, favoured larger-scale farms and manufacturing factories over the one-person artisan shops and small-scale farms that previously dominated the economy. This shift towards larger scale operations required much larger capital investments and financings, and the formerly local banks and small private banks were ill-capitalized to support and take on the risk of these burgeoning capital-intensive industries. During the mid-19^th century, many of these small provincial or private banks amalgamated with each other, and converted into joint-stock banks that could raise capital by issuing new shares to shareholders.

In 1840, Clydesdale Bank took over the Greenock Union Bank. Despite that, by 1857, it still only had 13 branches and remained a smallish bank. It was perhaps this prudence that kept the bank in relative financial health, for in that same year, the 101-branch Western Bank of Scotland, the second largest bank in Scotland at the time after the Royal Bank of Scotland (RBS), collapsed during a general financial panic, and Western Bank’s operations were broken up and taken over by other rivals, including the RBS, Clydesdale and others. During the same crisis, the City of Glasgow Bank also suspended payments (operations), and likewise some operations were transferred to Clydesdale Bank, which doubled its number of its branches.

As London rose to become the premier financial centre of the world in the second half of the 19^th century, Clydesdale Bank opened a branch in London in 1877. Back in 1874, Clydesdale Bank had opened a few branches in Northern England in the area that is right next to its Scottish home market. But beyond the these few “cross-border” branches, banking in England, Scotland and Northern Ireland has historically been quite separate from each other -- in other words -- English banks have very few branches and minuscule market share in Scotland and Northern Ireland, and vice versa for the Scottish and Northern Irish banks. This did not mean that banks from all three "countries" could not acquire or control banks in each other's territories, though this typically involved the much more powerful English banks having a stake in Scottish or Northern Irish banks rather than the other way around. (Unlike Scotland and Northern Ireland, Wales is not a separate legal jurisdiction and its legal system is integrated with that of England.) 

Shortly after World War I, the smaller and weaker Scottish banks found themselves facing challenging market conditions, and a wave of Anglo-Scottish takeovers happened. In 1919, London City and Midland Bank (later becoming Midland Bank and today’s HSBC), at the time the world’s largest bank based on deposits, took over Clydesdale Bank.  Then in 1923, Midland further acquired the North of Scotland Bank. As in all Anglo-Scottish or Anglo-Irish bank takeovers, the management, corporate identities, boards of directors and operations of the acquired banks remain separate from the parent bank. Hence, both Clydesdale and the North of Scotland enjoyed to a large degree their autonomies. This only changed in 1950 when Midland’s two Scottish units were combined to become the Clydesdale and North of Scotland Bank. Eventually, the rather cumbersome name was shortened back to Clydesdale Bank.

In early-1980s, Midland Bank itself became mired in the Latin American debt crisis, and had to divest its loss-making businesses and raise new funds to shore up its depleted capital. In 1987, Midland Bank sold Clydesdale Bank in Scotland (for GBP 420-million) and Northern Bank in Northern Ireland and Ireland (for a symbolic AUD $2) to the National Australia Bank (NAB) group. NAB was at the time keen to expand outside of its Australian and New Zealand home markets. In 1990, NAB further acquired Yorkshire Bank for GBP 976-million (see separate section below). These three purchases gave NAB a meaningful but if only regional footprint in Northern England, Scotland, Ireland and Northern Ireland, but not in the economic powerhouse in Greater London and Southern England.

During the early 2010s, however, Clydesdale Bank and Yorkshire Bank were caught up in an industry-wide (in Great Britain) unethical and fraudulent mis-selling and mis-handling of a financial product known as payment protection insurance (PPI), negatively impacting hundreds of thousands of affected clients.

Worse still, this PPI scandal broke out in the midst of the decade-long worldwide credit crisis that began in 2007, which resulted in soaring loan and trading losses, ultra-low interest rate spreads (which adversely impacted bank profitability), reduced demands for loans, little appetite for merger and other investment banking activities, and the need to unwind risky and complex financial positions – a process often called de-leveraging.

By 2014, NAB concluded its British operations were too small to compete efficiently with the bigger players in the market, and that it would be unaffordably costly to try to win market share. A decision was made to exit the United Kingdom retail banking market. However, by this time the PPI scandal had blown up into a very expensive mistake for both Clydesdale and Yorkshire Banks. The two banks eventually had to set aside at least GBP 2.1-billion of potential compensation to the PPI claimants.  In order to make Clydesdale and Yorkshire Banks a financially viable autonomous business, NAB agreed to cover GBP 1.58-billion of the PPI scandal provisions to relieve their financial pressure.

Finally, in early 2016, NAB spun off and floated Clydesdale Bank and Yorkshire Bank under a holding company called CYBG plc. NAB transferred 75% of CYBG shares to NAB shareholders, and sold the remaining 25% stake to institutional shareholders. To allow the Australian shareholders easy access to trade CYBG shares, CYBG was listed on both the London Stock Exchange and the Australian Securities Exchange.

CYBG plc (Yorkshire Bank lineage)

In 1859, Yorkshireman Colonel Edward Akroyd, a wealthy owner of large textile mills in Halifax, founded the West Riding of Yorkshire Provident Society and Penny Savings Bank. His wish was to encourage his workers to handle income prudently and to save for a rainy day. Col. Akroyd was one of those Victorian benevolent industrialists who strongly believed in caring for and improving the livelihoods of his employees and their families. As a matter of fact, he even had housing complexes and a school built right next to some of the factories where his workers worked.

As a provident society, the bank was originally a co-operative (a mutual bank). The new bank took off to a great start and began setting up offices in nearby towns. Being Britain’s largest county, Yorkshire’s administration was divided into three “ridings”: East, West and South. Col. Akroyd initially only had planned to operate in the West Riding. But in 1861, the bank abandoned both the “provident society” format and the West Riding focus, becoming the Yorkshire Penny Bank with well over 100 offices across the entire county.

Banking back then, particularly for a penny bank catering to the working lower class, was very different from today. The offices often amounted to no more than a counter located in a village school room, or a church basement, and typically only opened for business one evening a week. Yorkshire Penny Bank was said to be the first bank in the world to introduce the “school bank” concept in 1865, maintaining accounts for school children (as opposed to having an office inside a school for working adult clients). The bank’s first full-time daily branch opened in 1871. In any case, the Yorkshire Penny Bank became a local institution for the county.

Col. Edward Akroyd was so much loved and respected that some 15,000 mourners showed up at his funeral in 1887. His former residence in Halifax is now the Bankfield Museum.

In the 1911, however, an audit determined that the Yorkshire Penny Bank’s reserves were significantly underfunded and the Bank of England brokered a joint rescue-takeover of the bank by a long list of English clearing banks: National Provincial Bank, Westminster Bank, William Decons Bank, Lloyds Bank, Barclays Bank and Glyn Mills.

At its centenary in 1959, the bank adopted a simplified name of Yorkshire Bank.

In 1990, the National Australia Bank (NAB) group was keen to expand in the British Isles after its 1987 takeover of the Clydesdale Bank (in Scotland) and Northern Bank (in Northern Ireland and Ireland) from Midland Bank. Meanwhile, the English banks controlling Yorkshire Bank were also eager to divest their minority stakes, and Yorkshire Bank was sold to NAB for GBP 976-million (USD $1.65-billion). At that time, National Westminster (NatWest) held 40% of Yorkshire, Barclays (32%), Lloyds (20%) and the Royal Bank of Scotland (the remaining 8%).

Virgin Money (pre-CYBG takeover)

Long dominated by historical banks established in the 1600s, 1700s and 1800s, the British banking industry witnessed monumental changes after the 2007 global credit crisis and the technological disruption introduced by the internet and mobile phone in the 2010s. One result of these changes was the rapid emergence of new, mostly “branchless” banks, such as Virgin Money. This happened because: 1) the business of banking has moved rapidly towards internet and mobile-phone banking away from in-person branch banking; 2) the traditional “High Street” banks were busily cutting back branches and staff to reduce costs following heavy losses from the credit crisis; and 3) new banks with minimal numbers of branches have lower overhead costs and can offer better rates and prices for their clients. In the United Kingdom, these new banks are called “challenger banks” as they aimed to challenge the long-established “High Street” banks.

Virgin Money itself has a very short history, having been established only in 1995 initially as “Virgin Direct Personal Financial Service Ltd.” by Sir Richard Branson’s Virgin Group. Initially Virgin Direct was an income personal equity plan (known as “income PEP”) platform as a 50-50 partnership with insurer and asset manager Norwich Union. The income PEP was a registered account that allowed people over the age of 18 to invest a maximum annual amount in shares of British companies tax-free, meaning that the income and capital gains generated within the income PEP were not taxable. In 1999, the British government replaced the income PEP with the “Individual Savings Account” (ISA), which means that people are now able to put their money into a savings account and term deposit to earn interest tax-free, instead of being required to invest only in stocks that are more risky.

By having a lower maintenance fees than other financial institutions, Virgin Direct claimed that it received 4,000 phone calls on its opening day, and attracted GBP 42-million of assets under management in the first month.

In 1996, Virgin launched the Virgin Personal Pension product, again using the easy-to-understand and low-fee strategy to lure new clients from the traditional financial-services firms.

By 1997, Virgin Direct had already attracted GBP 1-billion in funds under management, at which time it launched the One account in partnership with the Royal Bank of Scotland (RBS) and Australian financial service group AMP (originally Australian Mutual Provident) to offer the “offset mortgage” product. At its launch, RBS owned 50% of the One account platform, with Virgin Direct and AMP each owning a 25% stake.

A traditional mortgage loan typically has a set interest rate, a fixed repayment schedule, and strict limitations on how much, if any, of the outstanding mortgage loan can be repaid ahead of (or behind) schedule. An offset mortgage like the Virgin One, on the other hand, charges interest on the outstanding mortgage balance less the balances in the borrower’s savings accounts on a daily basis. In other words, every time money is deposited into the borrower’s savings account (such as a payroll deposit), the balance of the mortgage loan drops (hence “is offset”) by that deposit. This flexible mortgage payment option has the potential to speed up significantly the full repayment of the loan than a traditional mortgage.

Initially available only to Virgin Direct’s 200,000-strong income PEP and Personal Pension clients, the One account was so popular that it was expanded to the general public by 1998.

Also in 1997, Australia’s AMP acquired Norwich Union’s 50% stake in Virgin Direct. As part of the agreement, AMP gained the worldwide licence to use the “Virgin” brand in retail financial services.

In 2000, Virgin Group once again partnered with AMP to launch “virginmoney.com” as a one-stop on-line “supermarket” for financial products such as ISAs, unit trusts (mutual funds), mortgages and life insurance.

In 2001, the Royal Bank of Scotland took over the Virgin One mortgage platform from Virgin Direct (25%) and AMP (25%) for about GBP 100-million. Virgin One had about 70,000 accounts and GBP 3.75-billion of mortgage receivables at that time.

In 2002, Virgin Direct and VirginMoney.com were amalgamated to become Virgin Money, and continued to be jointly-owned by Virgin Group and AMP. Meanwhile, Virgin Money launched its first credit card offering. Despite the agreement with AMP to license the “Virgin Direct” brand worldwide in 1997, it was only in 2003 that Virgin Money Australia was launched to offer credit card products outside of Britain for the first time. Virgin Money Australia eventually expanded into the superannuation, mortgage and insurance business. Further expansion saw Virgin Money opening for business in South Africa in 2006 and the United States in 2007. However, the American banking market is incredibly competitive and difficult to penetrate. Merely three years late, Virgin Money US was shuttered. And the South African operations also remained minuscule.

In 2004, AMP spun off and floated its British operations into HHG plc, which included the 50% stake in Virgin Money, which HHG immediately sold to Virgin Group for GBP 90-million (AUD $220-million), hence allowing Virgin Group to fully control Virgin Money for the first time. Even though by now Virgin Money had over 700,000 clients across Britain and GBP 4.7-billion of client assets, profits remained very slim.

In 2010, American billionaire financier Wilbur Ross acquired a 21% stake in Virgin Money for GBP 100-million. The following year, Virgin Money and Virgin Group, backed by Wilbur Ross and Abu Dhabi investor Stanhope Investments, took over the nationalized regional bank Northern Rock from the British Treasury for GBP 747-million in cash plus GBP 150-million of debt funding. The British government had sunk GBP 1.4-billion back in 2007 to rescue and nationalize the bankrupt Northern Rock, which had 75 branches at the time of the Virgin acquisition.

Following the combination, Virgin Group’s stake in Virgin Money was diluted to 46%, with Wilbur Ross’s various investment vehicles holding 44% and Stanhope Investments the remaining 10%.

The year 2011 also saw the opening of the first Virgin Money lounges in Edinburgh and Norwich. Virgin Money lounges are meant to give clients a place to relax and unwind. The lounges offer complimentary refreshments, wi-fi internet service, newspapers, magazines and iPads. Each lounge has a unique design, such as the imitation of the interior of a Virgin Atlantic Airways airliner, or a bowling alley, or a cinema. Virgin Money lounges are offered free of charge for community events after hours. As of 2018, there are eight Virgin Money lounges.

Like its British parent, Virgin Money Australia was never particularly successful nor profitable.  In 2013, conceding that its Australian business failed to gain market share and deliver anticipated profitability, Virgin Money sold Virgin Money Australia to local regional lender Bank of Queensland for AUD $40-million.

In 2014, Virgin Money was floated on London stock exchange when owners Sir Richard Branson’s Virgin Group and Wilbur Ross each unloaded about 15% of the bank. Following the IPO, both investors retained about one-third of the British bank.

CYBG plc (doing business as Virgin Money)

In May 2018, CYBG agreed to take over Virgin Money for GBP 1.7-billion (USD $2.3-billion) in cash. The combined operations would become the No. 6 bank in the United Kingdom with 6 million clients. Despite that, the new bank would still only control about 2% of the market share, compared with market leader Lloyds' 24% share. Virgin Money’s 74 branches will be combined into CYBG’s 169-branch network, but branch closures and 1,500 job losses are planned. Existing CYBG shareholders would own 62% of the new bank, with existing Virgin Money holders owning the rest. Virgin Group’s stake in Virgin Money will fall from 34.8% to 13.1%.

In a rather controversial and puzzling arrangement, the new bank plans to adopt the brand “Virgin Money” for all of its “High Street” (i.e. retail banking) operations and will pay an annual GBP 12-million license fee to Virgin Group for the first three years, rising to GBP 15-million in the fourth year, then a 1% annual royalty based on revenue to Sir Richard Branson. Some existing clients and employees of both Clydesdale and Yorkshires are also said to be dismayed about the branding changes.

Furthermore, as one of the three clearing banks in Scotland, Clydesdale Bank has been issuing part of the Scottish Pound banknotes since its establishment in 1838. In 2019 Virgin Money announced that even though the former brands of Clydesdale Bank and Yorkshire Bank would terminate by 2021, it confusingly would continue to issue Scottish banknotes in the name of Clydesdale Bank.

In March 2024, British mutual bank Nationwide Building Society agreed to acquire Virgin Money for GBP 2.9-billion in cash. As the sixth largest bank in Britain in terms of total assets, Virgin Money has 6.6-million personal and business clients with total loans of GBP 72.8-billion, including a mortgage portfolio of GBP 57.1-billion and deposits of GBP 67.3-billion. The combination would expand Nationwide's branch network to 696, second largest in the UK only to Lloyds Banking Group; and assets totalling GBP 366-billion. Nationwide would overtake NatWest to become the second largest mortgage lender in the country. Nationwide intends to retain Virgin Money's 7,300 employees in the near term. The Virgin Money branding will be terminated eventually, however.

Click here to return to the Index page.