CYGB (LON:CYBG) has agreed to take over Virgin Money in a deal worth £1.7 billion.

Under the terms of the deal, Virgin Money shareholders would receive 1.2125 new CYBG shares in exchange for each Virgin Money share.

Following completion of 371p per share, or £1.7bn deal, Virgin Money shareholders would own about 38% of the combined group.

‘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,’ Jayne-Anne Gadhia, CEO of Virgin Money.

CYBG’s retail customers will be moved to Virgin Money over the next three years and the joint venture will become the UK’s sixth largest bank. However, 1,500 jobs may be lost.

The deal is set to complete in the fourth quarter of 2018.

Shares in CYBG are currently trading down 2.02 percent on the news, at 300.00 (1507GMT).