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Report: CYBG likely to raise Virgin Money bid

CYBG PLC is expected to improve its takeover offer for rival Virgin Money Holdings (UK) PLC after a nearly 8% decline in CYBG's shares knocked about £125 million from the value of its initial all-share proposal, the Financial Times reported May 27, citing analysts and people close to the prospective deal.

CYBG, whose takeover approach for Virgin Money initially valued the latter at £1.62 billion, could potentially add a cash element to its bid to push the deal over the line, several bankers familiar with the situation told the newspaper.

CYBG previously said that it was in the final stages of the regulatory process to adopt new models that are expected to reduce its credit risk-weighted assets and increase its common equity Tier 1 ratio, which would help fund such a cash component, the FT noted.

CYBG's share price fell after it reported a loss of £76 million for the six months to March-end, mainly due to a £350 million increase in provisions for misselling of payment protection insurance. The bank booked a profit of £30 million a year earlier.