Barron’s: British challenger banks are swaggering about — here’s one way to bet on them

They could be contenders. Smaller British lenders known as challenger banks have swaggered about of late, thanks in part to a significant merger agreed upon last month.

CYBG CYBG, +0.90% , the parent of Clydesdale Bank, Yorkshire Bank, and app-based bank B, has vowed that its $2 billion takeover of peer Virgin Money Holdings VM., +0.54% will turn it into the “first true national banking competitor” to the United Kingdom’s banking giants, rather than just a challenger.

For investors, the question now is which stocks in this plucky sector—filled with tech-savvy start-ups and refreshed old brands—look like the best bets, especially given that CYBG and Virgin Money’s shares have rallied on merger hopes.

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