CYBG PLC has made an approach to Virgin Money regarding a potential all-share combination of the companies.
Under the proposal, Virgin Money shareholders would own approximately 36.5% of the combined group.
CYBG said that the Virgin Money brand would play a significant role in the combined group, subject to reaching an agreement with Virgin Group Holdings Limited.
The combined group would have six million personal and business customers, and provide digital and mobile banking services.
The banking group also claimed that the proposed combination would create the â€œUK's leading challenger bank'.
However, CYBG added that there was no certainty that a formal offer would be made.
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