Nationwide is set to take over Virgin Money in one of the most audacious takeovers, making it a giant in the personal finance world.
It is the largest deal ever made by a female banker after Nationwide chief executive Debbie Crosbie announced the planned acquisition in the stock market on Thursday morning.
The deal, announced on the eve of International Women’s Day, means the new company will have assets of more than £370bn.
Nationwide CEO Debbie Crosbie announced the plan as the stock market opened on Thursday
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Both brands will still work separately in the short term and no Virgin Money branch closures are expected.
Nationwide said it does not intend to make any material changes to the size of Virgin Money’s 7,300-strong workforce “in the near term”. But it revealed it plans to rebrand the Virgin Money business as Nationwide within six years, though it will keep the two brands initially.
As well as total assets of £366.6bn – Nationwide’s £274.5bn and Virgin Money’s £91.8bn – the takeover will mean a combined 24.5 million customers and 696 branches.
Nationwide has the largest single-brand network in the UK and the combined group will have the second-largest group branch network behind Lloyds HBOS.
The combined group will also be the second-largest mortgage provider in the UK, overtaking NatWest.
Nationwide will extend its “Branch Promise” to Virgin Money branches – to retain a branch everywhere where the combined group is present until at least the start of 2026.
The planned acquisition was announced on Thursday morning
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One personal finance accountant said: “The good news for consumers is that Virgin Money has a terrible customer relations reputation while Nationwide has won awards for exactly that.”
This surprise proposed £2.9bn purchase puts Nationwide again in the spotlight after Ms Crosbie initiated the most dramatic rebranding in the British high street for decades.
Ms Crosbie said: “Importantly, Nationwide will remain a building society, and a combined group would bring the benefits of fairer banking and mutual ownership to more people in the UK, including our continuing commitment to retain existing branches, as part of our ‘Branch Promise’ and leading levels of customer service.
“We believe the combination would create a stronger and more diverse business that will be better placed to deliver value to our members and customers, both now and in the future.”
Nationwide has put forward a 220p-a-share approach for Virgin Money, including a planned 2p-per-share dividend payout, which it said is a 38 per cent increase on Virgin Money’s closing share price on Wednesday.
The companies have reached a preliminary agreement on the deal, with Nationwide now looking through Virgin Money’s books before making a firm offer.
The combined group will have assets totalling more than £366bn
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Virgin Money said the planned deal comes after a series of proposals from Nationwide and, if a firm offer is made on the same terms as those so far agreed, its board would “be minded to recommend it to Virgin Money shareholders”, adding that the firm would benefit from Nationwide’s “scale and pace of investment”.
Virgin Money chief executive David Duffy said: “This potential transaction with Nationwide represents an exciting opportunity to build on the significant progress we have made in becoming the only new Tier 1 bank in recent history.
“The combined scale and strength would expand our customer offering and complete our journey in the banking sector as a national competitor.”
Virgin Money was formerly the Clydesdale and Yorkshire bank group CYBG and rebranded after a £1.6bn takeover of Sir Richard Branson’s banking group in 2018.
Nationwide said the acquisition would mean a wider range of products and services would be available to its members, including the well-established business banking services provided by Virgin Money.
“A combination with Virgin Money would accelerate Nationwide’s strategy and create a stronger, and more diverse, modern mutual,” said Nationwide chair Kevin Parry.
“The combination would increase Nationwide’s scale and financial strength, put us in a stronger position to continue to provide Fairer Share Payments to eligible Nationwide members, and offer rates for mortgages and savings that are, on average, better than the market average.”
