The Clydesdale and Yorkshire bank’s (LON: CYBG) takeover of Virgin Money will lead to 1,500 job losses.

Virgin Money has accepted CYBG’s £1.7 billion takeover offer, which will lead to the creation of the UK’s sixth largest bank with six million customers.

The new lender will have “the scale, capabilities and financial muscle to disrupt the status quo” and rival the current biggest lenders.

David Duffy is the CYBG chief executive and will continue this role in the combined group. Jayne-Anne Gadhia has “agreed, in principle, to support the combined group as a senior adviser to the CEO”, said Virgin Money.

“By combining two of the UK’s leading challenger banks, we will create a national, full-service bank with the capabilities needed to compete effectively with the large incumbent banks,” said Duffy.

“We are bringing together CYBG’s 175-year heritage in serving retail and SME customers and advanced digital technology, with the iconic Virgin Money brand and consumer champion credentials.”

CYBG will adopt the Virgin Money branding, paying over £15 million per year to use the name.

“The combination of Virgin Money with CYBG will have greater scale to challenge the big banks. It will also accelerate the delivery of our strategic objectives, particularly the expansion of the products we offer to customers,” said Gadhia.

“This is a compelling deal for our shareholders, that accelerates value delivery and represents the beginning of the next chapter of the Virgin Money story.”

By reducing the overlap between the two groups, the lenders are hoping to make £120 million of annual savings by 2021.

The savings will partially be through 1,500 job cuts. Many of the job roles affected will be senior management posts.

CYBG is paying 1.2125 new shares in exchange for every Virgin Money share.

Based on Virgin Money’s closing price of 306p on Friday, this values each share at 371p.