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Virgin Money’s deal with CYBG makes commercial logic but it won’t reshape the banking sector

So much for the post-crisis idea that the UK’s big four banks would be knocked off their comfortable perches by a combination of new technology and “challenger” banks. A decade on, it’s hard to detect a meaningful shift in market shares. Lloyds Banking Group, the undisputed leader in the UK, isn’t noticeably weaker for being shorn of TSB and last year got bigger in credit cards, the only corner in which it was underweight, by buying MBNA’s operation in the UK.

It’s little wonder, then, that challengers are concluding they won’t get far on their own. CYBG, which isn’t a true new-breed challenger anyway since Clydesdale Bank was born in Glasgow in 1838 and Yorkshire Bank in Halifax in 1859, wants to merge with Virgin Money to “create the UK’s leading challenger bank” to offer “a genuine alternative to the large incumbent banks”.

Related: Richard Branson set for large profit if CYBG and Virgin Money merge

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