• Swindon & Wiltshire M&A, deals
• Thursday March 7 2024
• Author Name: Peter Davison

Nationwide agrees to buy Virgin Money in £3 billion deal

Swindon-headquartered building society Nationwide has agreed to buy Virgin Money for nearly £3 billion.

The deal would create the second-largest provider of mortgages and savings in the UK.

The companies have agreed terms for the takeover, which would create a new banking sector giant with £366 billion in total assets, nearly 700 branches, and more than 23 million customers.

The takeover would see the Virgin name phased out over six years. Its current owners – Clydesdale and Yorkshire Banking Group – are still paying Richard Branson’s Virgin Group millions of pounds a year to use the brand name.

Nationwide, which has around 18,000 employees, said it “does not intend to make any material changes to the size of the Virgin Money employee base in the near term.” Virgin Money has a workforce of around 7,300.

It also said it would maintain its “branch promise” to keep existing branches open until at least 2026, but that any closures already planned by Virgin Money – which has 91 outlets – will still go ahead.

Nationwide chairman Kevin Parry said: “A combination with Virgin Money would accelerate Nationwide’s strategy and create a stronger, and more diverse, modern mutual.

“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.”

Nationwide CEO Debbie Crosbie added: “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.”

Virgin Money CEO 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.”

Nationwide’s deal offers Virgin Money shareholders 220p a share – a 38 per cent premium on the bank’s share price on Wednesday.

If approved by shareholders, Nationwide would become the UK’s second-largest provider of mortgages and savings in the UK, behind Lloyds.

Read an update on this story 21 March 2024